The finance ministry presented a draft amendment of tax laws in March in connection with implementation of legislation of the European Union, more specifically the European DAC 6 directive. On 9 April 2019, the comment proceeding ended. The amendment of the tax laws should then come in operation from 1 January 2020.

As we have already informed you in the previous articles on our website (for example here, here or here), the European DAC 6 directive governs the process of Reporting obligation on cross-border arrangements (transactions), which are now governed by act no. 164/2013 Coll., on international cooperation in tax administration. In the amendment of the tax laws, the transactions that are subject to reporting obligation are not defined exactly, but the criteria are stated here, for which transactions need to be tested, and if fulfilled, the transactions need to be reported to the tax administrator. The deadline for reporting a transaction has been set at 30 days from the day after scheme is made available for implementation, is ready for implementation, or since the first step in the implementation has been made. Archiving of documentation of cross-border arrangement has been set at 10 years and is subject to a fine up to CZK 500,000 in case of infringement. In case of infringement on the reporting obligation (i.e. failure to announce a cross-border arrangement), a fine of up to CZK 1.5m is impending.

The amendment of the tax laws continues to preserve confidentiality of tax consultants and lawyers in relation to their client, but the respective consultant (mediator), who has been familiarised with the cross-border arrangement or suggested it, must inform his client that the client is obliged to report this cross-border arrangement within the regular deadline (on the assumption that no other mediator, who is not subject to professional confidentiality, participates in the transaction). In case the mediator does not point out the information obligation to the client, he may face a fine up to CZK 500,000.

We will continue to monitor further development for you.