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Czech Government Approves Draft Bill Increasing VAT Registration Threshold — Orbitax Tax News & Alerts

The Czech Ministry of Finance has announced that the Czech government approved a draft bill on 22 June 2022 that includes several tax measures, including an increase in the annual limit for mandatory VAT registration from CZK 1 million to CZK 2 million with effect from 1 January 2023. This follows the recent approval from the Council of The European Union for the Czech Republic to increase the threshold to the national currency (CZK) equivalent of EUR 85,000 at the conversion rate on the day of its accession to the EU. In addition to the increase in the VAT registration threshold, the annual income limit for entering the flat tax regime for self-employed persons will also be increased to CZK 2 million from 2023, along with the introduction of three different flat tax bands that determine the amount of the monthly flat tax advances.

Another important measure is the extension of the accelerated depreciation for tangible assets in the first and second depreciation groups that was provided in response to the COVID-19 pandemic. This includes that assets in the first group may be depreciated in 12 months instead of 3 years, and assets in the second group may be depreciated in 24 months instead of 5 years, with 60% depreciation allowed in the first 12 months for the second group. This was originally provided in respect of assets acquired in 2020 and 2021, and is now being extended to include assets acquired in 2022 and 2023.

The draft bill has been sent to parliament for approval.