Tax and accounting changes: what awaits us from 2024?

Option (not obligation) to keep accounts in the functional currency

Companies that carry out most of their transactions in one of the currencies EUR, USD and GBP will be able to keep their accounts in the so-called functional currency from 1 January 2024 and the Czech koruna will become a foreign currency for these companies. This change may be beneficial for some accounting entities, but its introduction, which is voluntary, must be carefully considered. The switch back from a foreign functional currency to CZK will only be possible if the chosen accounting currency ceases to be a functional currency according to the definition used.
Income tax and VAT will continue to be determined in CZK. Income tax plans to take the concept of functional currency into account and for 2024 the calculation of corporate income tax will be based on accounting and individual lines of the return will be converted into CZK.

However, VAT has not recorded any adjustment and has not yet announced any adjustment. If this situation remains, it will mean the necessity of dual accounting: accounting in the functional currency and VAT accounting in CZK. This is a strong argument for companies to consider introducing a functional currency immediately from 2024.

Changes in VAT rates

The existing two reduced VAT rates of 10% and 15% will be merged and replaced by one new reduced VAT rate of 12%. The new VAT rate will be applied, for example, to food, accommodation and catering services, heat and water and sewerage.

The standard VAT rate of 21% will remain, but some supplies that are currently subject to the reduced VAT rate will now be subject to the standard VAT rate, such as hairdressing services, beverages including draught beer, household cleaning, transport, storage of municipal waste and services of authors and performers.

Changes to the VAT deduction for passenger cars

The amendment limits the VAT deduction for passenger cars to a VAT amount of 420 thousand CZK. This limit corresponds to the amount of VAT on the purchase price of a car of CZK 2 million. CZK.

What can we help you with?

It is necessary to prepare in advance to comply with the above tax measures. Algotech consultants can help you with the following activities in the Oracle JD Edwards ERP system.

• Create new tax codes for use from 1/1/2024.
• Modify VAT outputs to match the new format - we will start working on the new format in Algotech as soon as it is published.
• Review business transactions/invoices - rates used.
• Set up the correct methods for correcting tax documents if the transactions are affected by rate changes.

As time for changes is very short, please contact us as soon as possible so that we can book the capacity of our consultants to set up your Oracle JD Edwards system in a timely manner.