Top-Up Tax

26. 6. 2023

What is the top-up tax

The term ‘top-up tax’ was used by the Ministry of Finance of the Czech Republic in connection with the consolidation package and the related explanatory memorandum, where we read about this tax in more detail (section 1.2.6.). explanatory memorandum to the consolidation package.

This is in fact the so-called global minimum corporate tax or, in other words, the global minimum tax, the parameters of which have been specified in the so-called two pillars of the common solution to the challenges of global taxation agreed by 136 OECD and G20 jurisdictions. Most information on Pillar 2 can be found in the material published by the OECD on its website under the title “Statement on Two Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economyhttps://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf

These rules were subsequently enshrined at the level of the European Union by Council Directive EU 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union, which was approved on December 14, 2022.

https://eur-lex.europa.eu/legal-content/CS/TXT/?uri=CELEX:32022L2523&qid=1685368167882

Who is affected by the top-up tax and what is the aim of the tax

The aim of the top-up tax is to ensure a minimum effective level of taxation for large multinational groups and large-scale domestic groups with annual revenues of EUR 750 million or more in two of the four preceding fiscal years.

What is the amount of the top-up tax

The level of minimum effective taxation is set at 15% in accordance with the Directive. The Ministry of Finance proposes a solution implemented by means of a separate legislative proposal - the so-called draft law on top-up taxes for the purpose of ensuring a minimum level of taxation of large multinational groups and large-scale domestic groups.

The most up-to-date information

The draft Act on top-up taxes with all supporting documents, such as the explanatory memorandum, can be found here: https://www.komora.cz/legislation/79-23-navrh-zakona-o-dorovnavacich-danich-t5-6-2023/

More information will be provided in the next issue of Tax News.

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