On Monday 8 November 2021, the coalition agreement was signed in the Chamber of Deputies. The chairmen of the coalition parties SPOLU and the Pirates and Mayors presented the coalition programme, which is an annex to the coalition agreement. The coalition programme presents the vision of the new government for the next four years. 

In this article, we give you an overview of the most important tax issues:

• Increase of the limit for compulsory VAT registration to CZK 2 million.
• Introduction of indexation of the taxpayer discount.
• Cancellation of EET and parametric modification of the control report.
• Reduction of VAT on construction or reconstruction of apartments and houses.
• Support of part-time work by reducing social security levies. Incentive settings for tax credits and deductions.
• Creating a tax brake that caps the tax burden. Once the composite tax quota reaches it, tax increases will automatically be ruled out.
• Reducing social insurance on the employers’ side by 2 percentage points, on the assumption of consolidated public finances.
• Introduction of tax holidays with income capping for families drawing parental allowance or having three or more children.
• Introduction of the possibility of deducting payments for care services from taxes (up to a certain limit).
• Solving the problem of dividend outflows abroad by favouring re-investment into the Czech economy. 
• Reducing the number of depreciation groups and reducing the depreciation period for selected groups.
• Better measures on transfer pricing and against illegal optimisation practices and tax evasion.
• Support for minimum corporate income tax in the EU and OECD to ensure that the profits of multinational corporations are taxed, where they are earned.
• Motivating companies to operate in an environmentally friendly way, examining the possibility of reducing VAT on all environmentally friendly products.
• Excise duties will take harmfulness into account.
• Examination of the possibility of abolishing non-systemic tax exemptions.
• Extension of municipalities’ options in setting the coefficient of the basic property tax rate.
• A single collection point through the development of the MY Taxes portal.
• Permanently higher tax benefits for patronage and sponsorship.
• Option to pay 1% of your pension to your parents or grandparents.
• Ability to keep accounting and tax records in euros.
• Tax support for reinvestment in research.
• Creating a central catalogue of recycled building elements and building “recycling hubs” to produce tax-efficient building materials from waste.
• Making the issue of employee shares more attractive.
• Pension reform: The pension will consist of two main components and a third voluntary component. The basic guaranteed component, the amount of which should in any case reflect the requirements for dignity of life in old age and the financial possibilities of the state, will be increased. The merit component will be based on contributions to the system and the number of children raised. Third voluntary component: Analysis of the current effectiveness of third pillar support. Establishment of a Swedish-inspired state or public fund for voluntary savings over and above compulsory social insurance. In addition, voluntary private pension savings, for example in the form of a long-term investment account.

This event, of course, did not go unnoticed by the current government, which subsequently published a statement by departing Finance Minister Alena Schillerová on the above-mentioned coalition programme on the website of the Ministry of Finance (see Comment by Alena Schillerová on the coalition agreement of the new government | 2021 | Ministry of Finance of the Czech Republic (mfcr.cz). In this statement, she mainly criticized the ignoring of issues related to COVID-19. On the contrary, she highlighted the introduction of the so-called tax brake, the increase in the taxpayer discount and the reduction in social insurance. However, she also pointed out that the points mentioned will probably have a negative impact on the state budget. She also expressed concern that these steps, combined with the absence of austerity measures, could lead to adverse developments in public finances during the new government’s mandate. We will keep you informed about further development.