As of 1 January 2024, an EU directive will come into force, under which the income of multinational and domestic groups in the EU with a consolidated turnover of a minimum of EUR 750 million will be subject to a 15% corporate income tax rate. From 1 January 2024, a new Czech law on top-up taxes ensuring a minimum level of taxation of large groups of companies, which fully reflects the above-mentioned EU Directive and is currently subject to external comment procedure, will also come into force.

What can we expect?

• The minimum income tax is calculated so that the effective tax rate is at least 15%.
• However, the calculation of this tax is very complicated and differs substantially from the domestic calculation (IFRS basis, exemptions, special deductions, transitional periods, etc.) – i.e. it may actually affect you even though you pay the standard 19% corporate income tax (21% from 2024 under the government’s plans).
• But even if your effective tax rate is higher than 15%, you will still be required to comply with the administrative obligations for this tax (registration, filing the information sheet and tax return, reporting of the parent company) – i.e. you will de-facto need to calculate the tax anyway.
• For the calculation, you need detailed IFRS and other information/documentation specific for minimum tax (and it is not enough just to have general information from the group’s global accounting consolidation) – the group-wide minimum tax administration needs to be set up in time.
• If you are the recipient of significant investment incentives or tax deductions (typically for research and development), this regulation is likely to have a real impact on you.

How can we help you?

• we will analyse the current state of your group, i.e. if and how the EU directive, or its Czech implementation, affects you;
• we will analyse of the current system setup, i.e. if the necessary data are available, or assistance in identifying key data;
• we will prepare an indicative calculation of the effective tax rate, or tax base, and any top-up tax;
• we will assess and assist you in fulfilling other administrative obligations related to the new legislation;
• arrange for assistance from Grant Thornton offices abroad, if required.

If you have any questions about this issue, please do not hesitate to contact your Grant Thornton contact person or our specialists Petr Němec, Jaroslav Foltýn or Martin Hahn.

Author: Petr Němec, Jaroslav Foltýn, Martin Hahn