Czech Republic: New financial bodies

The Czech Parliament passed the amendment to the Financial Institutions Act that establishes two new tax administration institutions: the General Financial Directorate and the Specialised Financial Office.

The General Financial Directorate (GFŘ) will be established in Prague on 1 January 2011. It will be detached from the current Central Financial and Tax Directorate which belongs to the Ministry of Finance. The head of the GFŘ will be the chief executive appointed by the Ministry of Finance. The GFŘ will be a new body independent from the Ministry of Finance and the Financial Directorate, and it will take over some functions carried out by the Ministry of Finance until now.

GFŘ’s task will be the preparation of new legislation (including publishing tax forms), the operation of financial directorates and the revision of decisions issued by the financial directorates in administrative procedures. The establishment of the GFŘ will not interfere with current competencies of the Ministry of Finance according to the Tax Administration Act or tax administrative procedures.

The Specialized Financial Office (SFÚ) is a new body that will be controlled by the Financial Directorate for Prague. It will be established with effect from 1 January 2012. Selected bodies such as banks (including branches of foreign banks), insurance and reinsurance companies, and legal persons that have been established for the purpose of carrying out business activity and that have net sales exceeding CZK 2 billion will newly fall under the SFÚ’s responsibility with effect from the second taxable period following the taxable period in which the respective turnover has been reached.

If the turnover drops under CZK 2 billion, the body will stay under the SFÚ’s responsibility for the following three years. The GFŘ can decide that those tax payers which require a certain level of expertise (for instance, in the area of international taxation or transfer pricing) will also fall under the responsibility of the SFÚ. The GFŘ can also decide that any legal person is not seen as a selected body.

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