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Czech Republic Drafts Digital Services Tax Law

Thursday, September 5, 2019

On September 5, 2019, the Government of the Czech Republic received from the Ministry of Finance draft legislation for the introduction of a temporary digital services tax, which was first announced in April 2019.

According to the finance ministry, the scope of the tax is based largely on the European Commission's proposals for an temporary EU digital tax, which will apply to revenues from online advertising, the sale of user data, and intermediation services, by companies with a global turnover of EUR750m (USD825m) or more and realizing sales in the Czech Republic of at last CZK50m (USD2.1m) per year. The DST will only apply to revenue from intermediation services if the platform has in excess of 200,000 users.

The tax period for the digital tax will be the calendar year, and the tax will be payable three months after the end of the tax year, the ministry said.

The Government expects the digital tax to be introduced in mid-2020 subject to parliamentary approval, and estimates the tax will generate CZK2.1bn in additional revenue in 2020, and CZK5bn annually thereafter.

Finance Minister Alena Schillerova said that the tax will apply until global digital tax measures are agreed at international level under the leadership of the OECD and subsequently implemented in the Czech Republic.