Czech Republic approves tax reform measures for FY 2024

The Parliament of the Czech Republic approved the Act on the Consolidation of Public Budgets. Most of the proposed amendments are scheduled to take effect from 1 January 2024. Some of the key tax measures are following:

The corporate income tax rate will be increased from 19% to 21%. Companies can maintain accounts in foreign currencies, such as EUR, USD, and GBP if the chosen currency is the company’s functional currency.

A new regulation has been implemented that limits deductible expenses for company cars. Under this rule, any depreciation calculated on amounts exceeding CZK 2 million per car will no longer be eligible for tax deductions.

Employers can claim tax deductions for expenses related to non-financial benefits provided to employees, provided that the benefits are taxable for the employee (i.e., exceeding their exempt income amount) and the entitlement to these benefits arises from a contract, internal regulation, or collective agreement.

Public Country-by-Country (CbC) reporting is introduced according to EU Directive 2021/2101, including a general public reporting threshold of annual consolidated revenue of EUR 750 million, which applies for accounting periods starting on or after 22 June 2024.

The law must now be signed by the president and published in the Official Gazette to be effective. Generally, tax measures will take effect from 1 January 2024.

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