Czech Republic

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Personal scope of application As per 26 June 2022

Are there any deviations from the Directive in defining the intermediary?

2021/07/01

Non-biding interpretation released by the Czech tax authority, however, further provides this information:Czech DAC6 Act generally distinguishes between two types of intermediaries, primary and secondary. Primary intermediary means a person (natural or legal) who proposes, offers on the market, organizes, updates implementation of a given cross-border arrangement, etc.Secondary intermediary means a person (natural or legal) who provides assistance, support or advice regarding the design, marketing, organization, management of the implementation of the given arrangement, etc. The secondary intermediary must know (or should know) based on the relevant facts and circumstances, and based on the information, expertise and understanding available that is providing services fulfilling the characteristics of ancillary mediation. For example, a bank that is aware of its role in the implementation of steps that lead to circumvention of the common OECD reporting standard will qualify as a secondary intermediary. However, if the bank only opens an account and does not know that this account is to be used in the arrangement, then it will not be a secondary intermediary.

How is an intermediary defined? Is there a differentiation between a corporate entity and an individual person?

2021/06/17

An intermediary subject to DAC6 obligations (i) has to be subject to taxation in EU, or (ii) has to have a permanent establishment in EU through which provides services relating to an arrangement, or (iii) is established or ruled according to the EU law, or (iv) is registered in a professional association providing legal, tax or advisory services in any EU state.Czech DAC6 Act generally distinguishes between two types of intermediaries, primary and secondary one. Primary intermediary means a person (natural or legal) who proposes, offers on the market, organizes, updates implementation of a given cross-border arrangement, etc.Secondary intermediary means a person (natural or legal) who provides assistance, support or advice regarding the design, marketing, organization, management of the implementation of the given arrangement, etc.There are no differences between a company or an individual. Generally, all persons meeting the conditions of the definition of an intermediary are obliged to report the arrangements, if it would not breach the legal professional privilege (e.g. tax advisors, lawyers, notaries, statutory auditors, etc.).

Can a corporate tax department (or its members) within a MNE or within a group of entities qualify as an intermediary?

2021/06/17

Yes, if the definition of an intermediary is fulfilled.

How are the actions of designing, marketing, organizing, making available for implementation or managing the implementation of a tax arrangement defined?

2021/06/17

These actions are not defined in the Czech DAC6 ActNon-biding interpretation released by the Czech tax authority, however, further provides this information:"Making available for implementation" means that the arrangement is ready, tradable and offered on the market."The arrangement is ready for implementation" means the fact that the customization of the arrangement has been completed.The act of signing a contract does not have to be taken as a first step in implementation of the arrangement but the first step of the procedure following the already concluded contract can be considered as the first step. The reason is to prevent possible backdating of contracts and thus avoid possible notification obligations.

Have the legal preconditions regarding the territorial nexus for an intermediary been implemented in accordance with the Directive?

2021/06/17

There are no deviations from the Directive.

Are there any other conditions apart from those of the Directive, such as the territorial nexus of a tax arrangement to a certain Member State, which trigger a reporting obligation of an intermediary (e.g. including intermediaries from outside the EU)?

2021/06/17

There are no deviations from the Directive.

In which cases is the relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.An intermediary is primarily obliged to report the arrangements. If, however, the intermediary is bound by professional privilege due to national law (e.g. tax advisors, lawyers, notaries, statutory auditors, etc.), the notification obligation in respect of a tailor-made arrangement passes directly to the taxpayer. The intermediary that is bound to professional privilege must announce this fact to the taxpayer (user of the arrangement) and other intermediaries involved in this arrangement.Non-biding interpretation released by the Czech tax authority, however, further provides this information:In the case of a tailor-made arrangement that is created for a specific user, the intermediary that is bound to professional privilege is not a liable person to report the arrangement and the reporting obligation passes either to another intermediary, or if the arrangement has no longer another intermediary, the reporting obligation passes to the users of the arrangement. However, the transfer of the reporting obligation to the user is conditioned by the fulfilment of so-called "information obligation by the intermediary", i.e. the intermediary of the cross-border arrangement, who is not at least partly a liable person to report the arrangement due to the professional privilege, is obliged to inform other intermediaries and the user of this arrangement.In the case of a standardized arrangement, the professional privilege applies to the user and not to the arrangement as such. In this case, the intermediary shall report other information about the arrangement, except for the information about the users of the arrangement. In a given situation, it is desirable that the intermediary who reported the arrangement also shares the identification number of the arrangement (no. A-ID), which he receives after processing his notification, with the user of the arrangement

Are there any other persons beside intermediaries or relevant taxpayers obliged to report?

2021/06/17

There are no deviations from the Directive.

Are there any deviations from the Directive in defining the relevant taxpayer?

2021/06/17

There are no deviations from the Directive.A taxpayer is a person (natural or legal) to whom a reportable cross-border arrangement is made available for implementation, or who is ready to implement a reportable cross-border arrangement or has implemented the first step of such an arrangement.Based on the non-biding interpretation released by the Czech tax authority, it is, in general, any person for whom the arrangement is formed or has been offered and who uses the arrangement.

Mechanism to avoid multiple reporting

Which measures have been taken to avoid multiple reporting obligations referring to an intermediary obliged to report in several countries? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.In general, there are no measures/interpretation of how to avoid multiple reporting obligations so far.Non-biding interpretation released by the Czech tax authority, however, further provides this information:The intermediary or other person is not obliged to submit a notification about a cross-border arrangement in the Czech Republic if another liable person has already filed a notification in another EU State and the notification contained the same information that would be required in the Czech Republic.In case the cross-border arrangement has been notified by another person or the arrangement has been notified in another EU Member State, identification numbers (numbers A-ID a D-ID) of the notified arrangements should be kept as proof that the notification obligation was met by another person. Furthermore, these identification numbers are necessary for any subsequent/additional notifications (relating to the same arrangement).

Which measures have been taken to avoid multiple reporting obligations referring to more than one intermediary obliged to report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.In general, there are no measures/interpretation of how to avoid multiple reporting obligations so far.Non-biding interpretation released by the Czech tax authority, however, further provides this information:The intermediary or other person is not obliged to submit a notification about a cross-border arrangement in the Czech Republic if another liable person has already filed a notification in another EU State and the notification contained the same information that would be required in the Czech Republic.In case the cross-border arrangement has been notified by another person or the arrangement has been notified in another EU Member State, identification numbers (numbers A-ID a D-ID) of the notified arrangements should be kept as proof that the notification obligation was met by another person. Furthermore, these identification numbers are necessary for any subsequent/additional notifications (relating to the same arrangement).

Which measures have been taken to avoid multiple reporting obligations referring to a relevant taxpayer obliged to report several countries? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.In general, there are no measures/interpretation how to avoid multiple reporting obligations so far.Non-biding interpretation released by the Czech tax authority, however, further provides this information:The intermediary or other person is not obliged to submit a notification about a cross-border arrangement in the Czech Republic if another liable person has already filed a notification in another EU State and the notification contained the same information that would be required in the Czech Republic.In case the cross-border arrangement has been notified by another person or the arrangement has been notified in another EU Member State, identification numbers (numbers A-ID a D-ID) of the notified arrangements should be kept as proof that the notification obligation was met by another person. Furthermore, these identification numbers are necessary for any subsequent/additional notifications (relating to the same arrangement).

Which measures have been taken to avoid multiple reporting obligations referring to more than one relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.In general, there are no measures/interpretation of how to avoid multiple reporting obligations so far.

How does the National Tax Authority expect the conditions for exemption from filing a report to be met?

2021/06/17

There is no specific guidance.

Material scope of application

Are national tax arrangements subject to reporting under the Directive?

2021/06/17

National tax arrangements are not subject to report.

Which taxes are affected? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.

Does the hallmark catalogue deviate from the Directive? If yes, to what extent?

2021/06/17

There are no deviations from the Directive.

Which hallmarks are linked with the main benefit test?

2021/06/17

There are no deviations from the Directive.

How is the main benefit test defined?

2021/06/17

There is no explicit definition in the local legislation.Non-biding interpretation released by the Czech tax authority, however, further provides this information:The main benefit test is to assess whether there is a causal link between the hallmark of the arrangement (i.e. a particular feature or feature of the arrangement) and the tax advantage that can be expected if the arrangement is used. An arrangement meets the main benefit test if one of the principal benefits that its user can reasonably expect from all relevant facts and circumstances is to obtain a tax advantage.

How is a tax advantage defined?

2021/06/17

There is no explicit definition in the local legislation.Non-biding interpretation released by the Czech tax authority, however, further provides this information:No definition or quantification of the tax advantage is defined. However, the value of an arrangement to be reported depends on the type of arrangement (i.e. what hallmark the arrangement fulfils). In any case, the value of the arrangement is not linked to the amount of tax advantage that is achieved through the arrangement. Thus, for example, it may be the amount of consideration, the registered capital. In the case of a loan, it will be the amount of the loan principal. In the case of a transfer of shares in a company, it will be the value of the share, etc.

Are there any deviations from the Directive in defining a cross-border arrangement?

2021/06/17

There are no deviations from the Directive.Based on the non-biding interpretation released by the Czech tax authority, Czech DAC6 law distinguishes between two types of arrangements, standardized and tailor-made/customized. A standardized cross-border arrangement can be offered and implemented for multiple users without a need to adjust the parameters of the arrangement for the purposes of another specific user. This type of arrangement could be compared to "boxed software". The customized/tailor-made arrangement is tailored to the needs of a particular user of the arrangement.If a cross-border arrangement was created by 28 August 2020 inclusive (when the Czech DAC6 Act came into force) but the first step in its implementation was not taken, the arrangement will not be subject to the notification (reporting obligation). The arrangement will be reported once the first step in its implementation is taken.The Czech legislation currently applies this transitional narrowed regime that is limited only to the introduction of the first step of an arrangement created until the day preceding the date in which the Czech DAC6 law entered into force, i.e. until 28 August 2020 inclusive. In this case, there has been an incomplete transposition of the DAC6 Directive. However, amendment of the transposition relating to this period cannot be excluded in the future.

Is there a white list defining arrangements explicitly excluded from a reporting obligation? If yes, please provide details.

2021/06/17

There is no white list defining arrangements excluded from the reporting.

Are there any deviations from the Directive in defining associated enterprises?

2021/06/17

There are no deviations from the Directive.

Reporting process

When is a cross border arrangement made available for implementation (e.g. handover of contract documents)?

2021/06/17

Non-biding interpretation released by the Czech tax authority provides this information:Making available for implementation means that the arrangement is ready, tradable and offered on the market.The act of signing a contract does not have to be taken as the first step in the implementation of the arrangement but the first step of the procedure following the already concluded and signed contract can be considered as the first step. The reason is to prevent possible backdating of contracts and thus avoid possible reporting obligations.

When is a cross-border arrangement ready for implementation?

2021/06/17

Non-biding interpretation released by the Czech tax authority provides this information:The arrangement is ready for implementation if the customization of the arrangement has been completed.

When has the first step in the implementation of a cross-border arrangement been made?

2021/06/17

There is no specific guidance.Non-biding interpretation released by the Czech tax authority further provides this information:The act of signing a contract does not have to be taken as the first step in the implementation of the arrangement but the first step of the procedure following the already concluded contract can be considered as the first step. The reason is to prevent possible backdating of contracts and thus avoid possible notification obligations.

Which information should be included in the report? Are there deviations from the Directive?

2021/06/17

There are no deviations from the Directive.Note: Notification can be done in the Czech and English language. However, additional translation into Czech may be requested by the Czech tax authority (if needed).

What does the reporting process look like? Are there deviations from the Directive?

2021/06/17

The notification has to be filed in .xml format through the electronic filing system of the Tax authority (so-called "EPO"). The submission of the notification is allowed only by authenticated access (data messages signed by a confirmed electronic signature or a verified identity in a way that can be used to log in to electronic data boxes of a liable person). It is also possible to support third-party applications (in case the liable person is able to provide his own IT solution that meets all IT requirements and XML structure of the notification).

Is the entire report to be provided by the intermediary/relevant taxpayer? Who must provide the report?

2021/06/17

There is no specific guidance.Note: Anyone who was authorised to file/submit the report on behalf of an intermediary or a taxpayer with/to the respective tax authority based on a power of attorney may generally file/submit the report/notification (unless the report is filed/submit by the respective intermediary or taxpayer by himself).

What are the respective deadlines for the intermediary and the relevant taxpayer to file the report? Are there deviations from the Directive in terms of filing the information within 30 days?

2021/06/17

There are no deviations from the Directive.Extension of deadlines as suggested by EU was approved.According to the current status of relevant legislation, the reporting obligation in relation to selected cross-border arrangements should meet the following deadlines:1. for cross-border arrangements, the first step of which was implemented in the period from 25 June 2018 until 30 June 2020 (inclusive) the deadline is 28 February 2021;2. for cross-border arrangements that were made available or prepared for implementation, or their first step was realised in the period from 1 July 2020 until 28 August 2020 (inclusive) the deadline is 30 January 2021;3. for cross-border arrangements that were made available for implementation, that are prepared for implementation or of which the first step was realised by 31 December 2020 (inclusive) or for which a support, assistance or advisory was provided by an intermediary (alone or through another person or entity without legal entitlement) until 31 December 2020 (inclusive), the deadline is 30 January 2021;4. cross-border arrangements that were made available or prepared for implementation, or the first step of which will be realised after 1 January 2021 no later than within 30 days from such a decisive fact.Non-biding interpretation released by the Czech tax authority further provides this information:In general, notification of a cross-border arrangement shall be submitted within 30 days from the day when:• The arrangement has been made available for implementation• The arrangement has been prepared for implementation• The first step in implementing the arrangement has been taken.If the liable person is an intermediary, the notification shall be submitted within 30 days from the day when the support, assistance or advice in relation to the given arrangement was provided. Notification of a change in the information on a standardized (and already notified) cross-border arrangement shall be made within 30 days of the last day of the calendar quarter in which the change occurred.Based on the interpretation of Czech DAC6 law (as already mentioned above), the Czech legislation currently applies transitional narrowed regime that is limited only to the introduction of the first step of an arrangement created until the day preceding the date in which the Czech DAC6 law entrered into force, i.e. until 28 August 2020 inclusive = i.e. if a cross-border arrangement was created by 28 August 2020 inclusive but the first step in its implementation was not taken, the arrangement will not be subject to the notification (reporting obligation). The arrangement will be reported once the first step in its implementation is taken. In this case, there has been an incomplete transposition of the DAC6 Directive. However, amendment of the transposition relating to this period cannot be excluded in the future.

Which numbers are assigned by local tax authorities to the cross-border arrangements?

2021/06/17

A-ID = Identification number of arrangement (so called "Arrangement ID")D-ID = Identification number of disclosure/filing/submission (so called "Submission ID")Non-biding interpretation released by the Czech tax authority further provides this information:Identification Number of arrangement (A-ID) - this is a unique identifier of an arrangement that is automatically created after the processing of a new notification (i.e. the A-ID is assigned to a cross-border arrangement that is first notified within the EU). In the case of a subsequent/additional notification relating to the same arrangement, the A-ID number of the previously notified arrangement shall be used in the new notification.Submission Identification Number (D-ID) - This is a unique filing identifier that is automatically created after processing a new notification or a subsequent/additional notification (not the corrective notification). In case of corrective notification, the D-ID number of the previous electronic filing should be mentioned in the notification.

What is the reporting deadline for arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020?

2021/06/17

28 February 2021.

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies between 1 July 2020 and 31 December 2020?

2021/06/17

30 January 2021.

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies after 1 January 2021?

2021/06/17

Cross-border arrangements that were made available or prepared for implementation, or the first step of which will be realised after 1 January 2021 must be reported no later than within 30 days from such a decisive fact.

Penalties

In which cases are penalties imposed?

2021/06/17

- for not archiving all relevant reporting documentation (for 10 years) by the responsible person (intermediary)- for a breach of information obligation (e.g. not notifying another intermediary/taxpayer)- for any breach of reporting obligation required by the law (e.g. not filing a report, late filing, filing wrong information, etc.).

What are the penalties?

2021/06/17

Generally, a penalty up to CZK 500k (approx. EUR 18.8k) may be imposed for all types of reporting obligations breaches stated above, i.e.:- for not archiving all relevant reporting documentation (for 10 years) by the responsible person (intermediary) = penalty up to CZK 500k (approx. EUR 18.8k)- for a breach of information obligation (e.g. not notifying another intermediary/taxpayer) = penalty up to CZK 500k (approx. EUR 18.8k)- for any breach of reporting obligation required by the law = penalty up to CZK 500k (approx. EUR 18.8k)

Is a distinction made between penalties imposed on intermediaries/relevant taxpayers/other persons obliged to report?

2021/06/17

No distinction is made between intermediaries and relevant taxpayers.

What are the penalties in case of redundant reports? A redundant report is a report, which was filed, although there is no obligation to file one.

2021/06/17

There are no penalties for redundant reports.

Do the penalties differ with regard to incomplete, incorrect, missing or late reports? Are there any gradations?

2021/06/17

The penalties do not differ.

Are arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020 treated differently in the means of penalties?

2021/06/17

The penalties do not differ.

Other aspects

Do already other reporting regimes on cross-border arrangements exist?

2021/06/17

In most cases, transactions with foreign related parties are reported annually as a part of a corporate income tax return of a Czech entity, but only types of transactions and amounts in TCZK are reported without any further details. There is also CbCR reporting and notification obligation in respect of transactions that would under the local legislation be subject to withholding tax but are tax-exempt or are not taxable due to double tax treaties (again, a very limited amount of information is disclosed). No other disclosure regimes exist.

Are there any other special deviations from the Directive? 

2021/06/17

There are no deviations from the Directive.

What is the name of the national Tax Authority responsible for DAC6?

2021/06/17

Specializovaný finanční úřad (in English "Specialized Tax Office")

Do any other obligations apart from reporting a reportable cross-border arrangement exist under the national DAC6 legislation? (i.e. indication of the arrangement in the tax return)

2021/06/17

There are no other obligations.

Professional privilege/secrecy

Who is primarily obliged to report? Is there a primary reporting obligation of the intermediary or the relevant taxpayer? Is there legal privilege and in how far has it been considered for allocating the reporting obligation?

2021/06/17

There are no deviations from the Directive. An intermediary is primarily obliged to report the arrangements. If, however, the intermediary is bound by professional privilege due to national law (e.g. tax advisors, lawyers, notaries, statutory auditors, etc.), the notification obligation in respect of a tailor-made arrangement passes directly to the taxpayer. The intermediary that is bound by professional privilege must announce this fact to the taxpayer (user of the arrangement) and other intermediaries involved in this arrangement.Non-biding interpretation released by the Czech tax authority, however, further provides this information:In the case of a tailor-made arrangement that is created for a specific user, the intermediary that is bound to professional privilege is not a liable person to report the arrangement and the reporting obligation passes either to another intermediary, or if the arrangement has no longer another intermediary, the reporting obligation passes to the users of the arrangement. However, the transfer of the reporting obligation to the user is conditioned by the fulfilment of so-called "information obligation by the intermediary", i.e. the intermediary of the cross-border arrangement, who is not at least partly a liable person to report the arrangement due to the professional privilege, is obliged to inform other intermediaries and the user of this arrangement.In the case of a standardized arrangement, the professional privilege applies to the user and not to the arrangement as such. In this case, the intermediary shall report other information about the arrangement, except for the information about the users of the arrangement. In a given situation, it is desirable that the intermediary who reported the arrangement also shares the identification number of the arrangement (no. A-ID), which he receives after processing his notification, with the user of the arrangement

Does the reporting obligation breach a legal professional privilege under national law?

2021/06/17

No - Based on Czech law, all intermediaries that are bound by professional privilege (generally all tax advisors regulated by the Act on Tax Advisory Services, auditors regulated by the Act on Auditors, notaries regulated by the Notary Act, lawyers regulated by the Advocacy Ac) are given a waiver from filing obligation in respect of tailor-made arrangements. The notification obligation passes directly to the taxpayer after the intermediary that is bound to professional privilege announces this fact to the taxpayer (user of the arrangement) and other intermediaries involved in this arrangement.

Does the national law make reference to professional privilege or professional secrecy?

2021/06/17

There is no reference / professional privilege.There is only a reference to other Czech acts (e.g. the Act on Tax Advisory Services, Act on Auditors, the Notary Act, the Advocacy Act) in the Czech DAC6 law that guarantee professional privilege/professional secrecy to respective certified persons (i.e. tax advisors, auditors, notaries, lawyers).

What is the difference, as per the national law, between professional privilege and professional secrecy?

2021/06/17

There is no guidance.

To which categories of intermediaries does the professional privilege or professional secrecy apply?

2021/06/17

Tax advisors (regulated by the Act on Tax Advisory Services), auditors (regulated by the Act on Auditors), notaries (regulated by the Notary Act), lawyers (regulated by the Advocacy Act); or foreign intermediaries that have legal professional privilege exception based on the local act of another Member State.

In the context of the reporting obligation, under which conditions are the intermediaries entitled/obliged to make use of professional privilege or professional secrecy?

2021/06/17

Use of professional privilege / professional secrecy is an obligation for all certified tax advisors (regulated by the Act on Tax Advisory Services), auditors (regulated by the Act on Auditors), notaries (regulated by the Notary Act), lawyers (regulated by the Advocacy Act). Individuals (or registered certified companies) have to be able to prove that are ruled by one of the above acts (e.g. by providing with the respective certification).

In cases in which professional privilege or secrecy applies, please describe the procedure for notification.

2021/06/17

An intermediary is primarily obliged to report the arrangements. If, however, the intermediary is bound by professional privilege due to national law (e.g. tax advisors, lawyers, notaries, statutory auditors, etc.), the notification obligation in respect of a tailor-made arrangement passes directly to the taxpayer. The intermediary that is bound by professional privilege must announce this fact to the taxpayer (user of the arrangement) and other intermediaries involved in this arrangement.There is no guidance on the content or the form of the notification/announcement (in general, there should not be any difference between the content of the notification/announcement that would be sent to another intermediary and the notification/announcement that would be sent to a relevant taxpayer).

Does the national law provide specific conditions to waive professional privilege or professional secrecy?

2021/06/17

No.

Pavel Klein
Partner
Jana Hlavacova
Senior