Communication from the Ministry of Finance and the General Financial Directorate

Information on filing real estate tax returns

• The General Financial Directorate issued a notice on 18 January 2011 reminding that 31 January 2011 is the deadline for filing real estate tax returns. Failure to file the tax return by the deadline is subject to a minimum penalty of CZK 500. This duty applies to parties that acquired real property in 2010 (by means of a purchase, gift, inheritance, occupancy permit, etc.) or where the circumstances decisive for tax assessment changed. Tax on co-ownership shares can newly (commencing 2011) be returned not only in respect of land but also in respect of buildings and apartments.
• Tax returns can be filed electronically via the Tax Portal which increases the convenience of its user by providing them with the option to automatically add up rates and coefficients, check whether the filing is formally correct and send the tax return to the tax authority. The link to the Czech Tax Administration Portal is as follows: http://adisspr.mfcr.cz/adistc/adis/idpr_pub/dpr/uvod.faces.
• Every taxpayer will receive a money order by 31 May 2011 (the first due date) with the amount of the real estate tax assessed.

Summary of 2011 real estate tax coefficients

• The Ministry of Finance made available a summary of 2011 real estate tax coefficients on its website on 13 January 2011; the link is as follows: http://cds.mfcr.cz/cps/rde/xchg/cds/xsl/legislativa_metodika_11030.html?year=0.

Translation of selected chapters of the Transfer Prices Directive

• The Ministry of Finance published in its Financial Bulletin No. 7/2010, dated 27 December 2010, translated Chapters I through III and Chapter IX of the Transfer Prices Directive. The Directive was published by the Organization Economic Cooperation and Development (OECD) on 22 July 2010. The new version of the Directive contains amended Chapters I through III and newly inserted Chapter IX which addresses the review and assessment of transfer prices applied within restructuring of operations and risks of businesses within a corporate group. The amendment shall facilitate the selection of the best method for determining transfer prices given the circumstances, for the practical application of transaction profit methods and execution of comparative analyses. The translations are available on the website of the Czech Tax Administration: http://cds.mfcr.cz/cps/rde/xbcr/cds/Prehled_srovnatelnosti_a_ziskovych_metod.pdf and http://cds.mfcr.cz/cps/rde/xbcr/cds/Zprava_o_aspektech_prevodnich_cen.pdf.

2010 Uniform Exchange Rates

• On 4 January 2010 the Financial Directorate General issued Instruction GFŘ-D-1 Determination of 2010 Uniform Exchange Rates. The Instruction is binding on tax entities which do not keep and maintain books of accounts and convert currencies by applying a uniform rate as per Section 38(1) of the Income Tax Act. If currencies not listed in the currency list need to be converted, the conversion shall take place using a third currency to be agreed upon between the taxpayers or a conversion calculated by an authorized foreign currency expert shall be applied. The list of experts is available on, without limitation, the Justice Ministry’s website at:  www.justice.cz.