| Status | Enacted Law |
| Law | On April 26, 2024, the Czech government issued a draft law to amend the minimum tax act to implement aspects of the OECD Administrative Guidance. This was further amended on August 28, 2024. It was published in the Official Gazette as Act No. 316/2025 Coll on September 2, 2025. On December 29, 2023, Law 416/2023, to implement the EU Minimum Tax Directive, was published in the Czech Official Gazette. |
| Effective Date | Accounting periods beginning on or after December 31, 2023 |
| IIR | Yes (2024) |
| UTPR | Yes (2025) |
| QDMTT | Yes (2024) |
| Filing Deadlines | Standard |
| Safe Harbours | Yes, Transitional CbCR Safe Harbour, QDMTT Safe Harbour and the Transitional UTPR Safe Harbour. The 2025 Amendment Law includes the NMCE Simplified Calculations Safe Harbour. |
On April 26, 2024, the Czech government issued a draft law to amend the minimum tax act to implement aspects of the OECD Administrative Guidance. This was submitted to Parliament on August 28, 2024 and approved by the Chamber of Deputies on June 27, 2025. It was published in the Official Gazette as Act No. 316/2025 Coll on September 2, 2025.
On December 29, 2023, Law 416/2023, to implement the EU Minimum Tax Directive, was published in the Czech Official Gazette.
On August 16, 2023, the Czech Cabinet approved the draft top-up tax act.
On December 1, 2023, the Czech Senate approved the draft top-up tax act.
GLOBE APPLICATION
General
The explanatory notes to the original draft legislation state that in implementing the Top-Up Tax Act, the Czech Republic will use the Model Rules and the explanations and examples contained in the Commentary on the Global Model Rules, as well as the implementation framework and safe harbour rules. The safe harbour rules will be relevant for both large multinational groups and large national groups.
Offset of QDMTT
Section 34 of the Law provides for a Czech company to reduce the CFC tax determined in the Czech Republic under Section 38fa of the Income Tax Act, by the QDMTT levied in another jurisdiction by the part of the QDMTT that relates to the profits on the basis of which the CFC tax was determined.
This is to avoid possible double taxation of the same profits for a Czech company, as the CFC rules are applied first, but the foreign QDMTT does not take into account of the CFC tax in their calculation of the effective tax rate.
Currency Conversion
Section 36 of the Law includes rules for currency conversion, and provides that the exchange rates announced by the European Central Bank shall be used.
For the purposes of converting an amount in a currency other than the euro into an amount corresponding to the threshold under GloBE rules, the average exchange rate for the month of December immediately preceding the reporting period is to be used for the purposes of conversion.
The 2025 Amendment Law amends this to provide that top-up tax calculations are to be made in the currency in which the accounting records are kept for the purposes of the consolidated financial statements (the reporting currency). Amounts determined in another currency are converted to the reporting currency using the same method as in the preparation of the consolidated financial statements. For tax administration purposes (eg payment), amounts calculated in the reporting currency are converted into Czech currency at the foreign exchange market rate announced by the Czech National Bank for the last day of the taxable period. Other rules apply if the Czech National Bank does not announce a foreign exchange rate for the reporting currency.
Rounding
Section 76(7) inserted by the 2025 Amendment Law provides that for the general purposes of the top-up tax calculations, including the calculation of the ETR and currency conversion, the calculations are carried out with an accuracy of 4 decimal places.
3.2 Administrative Guidance
ADMINISTRATIVE GUIDANCE
The Law closely follows the OECD Model Rules, and includes a number of aspects of the OECD Administrative Guidance. The original draft law approved by the Cabinet in August 2023 was amended during the Parliamentary process to include additional elements of the OECD Administrative Guidance.
The following are included:
-Currency Conversion Rules (Article 1.1)
-Excluded Dividends – Asymmetric treatment of dividends and distributions (Article 2.3)
-Debt release election (Article 2.4)
-Accrued Pension Expenses (Article 2.5)
-Excess negative tax carry-forward guidance (Article 2.7)
-Substitute Loss-carry forwards (Article 2.8)
-Equity Gain or loss inclusion election (Article 2.9)
-The extension of Additional Capital to include Restricted Tier One Capital (Article 3.3)
-Tax Credits Guidance (MTTCs) (Article 2 Second Set of OECD Administrative Guidance)
-SBIE Rules
-Foreign rules (Article 3 Second Set of OECD Administrative Guidance)
The 2025 Amendment Law also includes:
-Sovereign wealth funds and the definition of Ultimate Parent Entity (Article 1.4)
-Forex hedge election (Article 2.2)
-Allocation of taxes arising under a Blended CFC Tax Regimes (Article 2.10 including the amendments from the December 2023 OECD Administrative Guidance)
-The extension of the taxable distribution method election to insurance investment entities (Article 3.1)
-Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)
-Portfolio shareholding election (Article 3.5)
-Currency Conversion Rules (Article 1 of the Second Set of OECD Administrative Guidance)
Therefore, the following are not included:
-Clarifying the definition of ‘Excluded Entity’ (Article 1.5)
-Meaning of “ancillary” for Non-Profit Organisations (Article 1.6);
-Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders (Article 3.4)
-Application of Tax transparency election to Mutual insurance companies (Article 3.6).
-SBIE Rules (Stock-based compensation election and leases – Article 3 Second Set of OECD Administrative Guidance)
Section 241 of the 2025 Amendment Law includes the deferred tax recognition amendments to Articles 9.1 of the GloBE Rules in the January 2025 OECD Administrative Guidance (including the grace period for DTA reversals). The consequential amendments to the Transitional CbCR Harbour (Section 92g) are also included.
Safe Harbour and Penalty Relief Guidance
The Transitional CbCR Safe Harbour is included in Part VI of the Law (Sections 92a-92m as inserted in the 2025 Amendment Law). The 2025 Amendment Law includes most of the amendments to this Safe Harbour that were provided in the December 2023 OECD Administrative Guidance. This includes:
-Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment)
-JVs
-Same Financial Statements/Local Financial Statements for Statutory Reporting
-Using different accounting standards
-Adjustments to Qualified Financial Statements/Dividend Misatches
-MNEs not required to file CbC Reports
-Qualified Financial Statements for PEs
-Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities
-Treatment of hybrid arbitrage arrangements
The OECD QDMTT Safe Harbour is included in Section 92a of Law (as inserted by the 2025 Amendment Law). It also includes the three OECD requirements for the safe harbour to apply (the QDMTT Accounting Standard, the Consistency Standard and the Administration Standard). Whilst the Switch-Off Rule is not specifically included in the Law, it does refer to exceptions for ‘deviations specifically provided for in the OECD implementation framework’.
Section 92m of Law (as inserted by the 2025 Amendment Law) includes the UTPR Safe Harbour which deems the UTPR Top-up Tax amount for a UPE Jurisdiction to be zero if the UPE Jurisdiction has a corporate income tax rate of at least 20 percent.
This applies for Fiscal Years which begin on or before 31 December 2025 and end before 31 December 2026.
Under the 2025 Amendment Law, the Simplified Calculations Safe Harbour for Non-Material Constituent Entities is provided in Sections 92b-92c.
ELECTIONS
Elections in the OECD Model Rules
The OECD Model Rules and the EU Minimum Tax Directive specifically offer two types of elections, an annual election, or a longer term 5 year election. The EU Directive for instance lists the elections in Article 45 and states which are 5 year elections and which are annual elections.
However there are a small number of other elections in the OECD Model Rules/EU Directive that aren’t mentioned in Article 45, but are included in the text of the directive.
The Czech Law takes a different approach and Section 26 offers 4 types of elections:
-a one-off election (described in the Law as ‘an election linked to a specific fact foreseen by law’;
-a short-term election (an election which is made for one tax year only);
-a medium-term election (an election which is made for five consecutive tax years); and
-a long-term election (an election which is not limited in its validity but can be revoked with effect for future tax years).
The Law provides that the elections are as follows:
-one time election: deemed disposal election, safe harbour election;
-short term election: capital gain carry-back election, distribution tax regime election, unclaimed accrual election, election not to apply the Substance-Based Income Exclusion, de minimis election, prior year adjustment election;
-mid-term election: consolidation election, tax transparency election, taxable distribution method election, excluded entity election, stock-based compensation election, realization basis election;
-long-term election: GloBE loss election
It therefore specifically carves out the GloBE loss election, safe harbour election and the deemed disposal election and includes them in the list of elections.
The Law therefore includes all of the key elections as provided in the EU Minimum Tax Directive, including:
-Excluded Entity Election (Section 7(2) of the Law)
-Election to use the Realization Method (Section 50 of the Law)
-Stock-Based Compensation Election (Section 49 of the Law)
-Election to Spread Capital Gains (Section 51of the Law)
-Consolidation Election (Section 52 of the Law)
-GloBE Loss Election (Section 64(4) of the Law)
-Tax Transparency Election (Section 74 of the Law)
-Taxable distribution Election (Section 75 of the Law)
-Unclaimed Accrual Election (Section 58 of the Law)
-Distribution Tax Regime Election (Section 71 of the Law)
-Substance-Based Income Exclusion Election (Section 82 of the Law)
-Prior Year Adjustment Election (Section 68 of the Law)
-De minimis Election (Section 91 of the Law)
-CbCR Safe Harbour (Section 143 of the Law)
Elections in the Administrative Guidance
Only the Excess Negative Tax Carry-Forward Election (Section 65 of the Law), Debt Release Election (Section 54 of the Law) and the Equity Investment Inclusion Election; (Section 53 of the Law) from the OECD Administrative Guidance are included in the original law.
The Portfolio Shareholding Election and Foreign Exchange Hedge Election are included in Section 54a and Section 54b of the 2025 Amendment Law.
New Elections
None.
DEVIATIONS FROM THE OECD MODEL RULES/EU GLOBAL MINIMUM TAX DIRECTIVE
Whilst the OECD Model Rules apply to multinational groups, the EU Minimum Tax Directive also applies the global minimum tax to domestic groups.
As such the Law provides that the global minimum tax (and QDMTT) will apply to purely domestic groups (eg where a UPE is resident in the Czech Republic, the IIR will apply to both Czech and foreign group entities).
As noted above, not all aspects included in the OECD Administrative Guidance are included in the Law.
The OECD Model Rules allow flexibility as to how to apply the UTPR. The Czech Republics approach is to apply a UTPR top-up tax rather than a denial of deduction.
As such the carry forward provisions in Article 2.4.2 of the Model Rules for UTPR amounts not sufficient to provide for the additional cash tax expense are not relevant and these rules are not included in the Law.
DOMESTIC MINIMUM TAX
General
Part 3 of the Law includes a domestic minimum tax that is likely to be a QDMTT. This allows the Czech Republic to levy top-up tax on the profits of low-taxed Czech-based entities of MNE groups that don’t have a UPE in the Czech Republic.
The calculation of the QDMTT is relatively straightforward. In particular it applies the top-up tax calculated under the general GloBE rules and then subjects this to a very small number of adjustments.
QDMTT Design Features
Sections 117-123 the Law includes a domestic minimum tax that is likely to be a QDMTT. This allows the Czech Republic to levy top-up tax on the profits of low-taxed Czech-based entities of MNE groups that don’t have a UPE in the Czech Republic.
The calculation of the QDMTT is relatively straightforward. In particular it applies the Top-Up Tax calculated under the general GloBE rules and then subjects this to a very small number of adjustments.
Key points to note are:
-Under Section 122 of the Law, MNEs could opt not to use the UPEs accounting standard and could instead use an accepted financial reporting standard or an authorized financial reporting standard provided that the information in the financial statements has been corrected to prevent any significant distortion of competition.
This means, for instance, that a Czech-based low-taxed group entity may choose to compute the excess profit for QDMTT purposes based on IFRS whilst its UPE uses GAAP of the USA in the preparation of its consolidated financial statements.
Section 122(3) of the Law also provided that the currency used in the local accounting standard can be used instead of the UPEs currency used in the consolidated financial statements. Note that the five-year election provided in the July 2023 OECD Administrative Guidance (for cases where not all Czech group entities use a local accounting standard) was not included in the Law.
This is removed in the 2025 Amendment law, as such, the accounting standard to be used will be the accounting standard based on the standard GloBE model rules.
-In order to avoid circularity, the top-up tax calculation formula for the QDMTT must be amended so that the QDMTT itself is not deducted. Section 119 of the Law provides for this.
-Tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules must be excluded, as provided in the OECD Administrative Guidance. This is included in Section 119(3)/(4).
This preserves the Czech Republic’s primary right to tax income accruing to a Czech member entity which is also a CFC. If there were no statutory derogation from the general GloBE rules for the calculation of the domestic minimum tax, and the CFC tax paid by the controlling company abroad were included in the included taxes of the Czech CFC, the effective tax rate would be increased. Therefore, excluding the CFC tax from the Czech CFCs covered taxes allows the Czech Republic to tax low-taxed income at a higher rate than would be the case under an IIR.
Note that the same applies to a Czech entity subject to top-up tax that holds an interest in a foreign CFC.
Section 119(3)/(4) of the 2025 Amendment Law restructures this provision and also includes a restriction on the pushdown of taxes to Hybrid Entities and taxes on distributions (aside from Czech withholding tax), as provided in the OECD Administrative Guidance.
Section 38fa of the Income Tax Act applies provisions to tax a controlled foreign company where the CFC’s foreign tax is less than half of the corporate income tax that would be imposed domestically.
In such a case, for GloBE purposes, the CFC tax assessed on the Czech member entity under Section 38fa of the Income Tax Act is not included in covered taxes for the Czech entity as this is allocated to the foreign controlled company to whose income the CFC tax effectively relates.
-Any QDMTT that has not been paid within four years is usually taken into account for top-up tax purposes in the fifth year. This does not apply for the QDMTT calculation (just for tax under an IIR or UTPR). This is required to avoid circularity and ensure the QDMTT is not taken into account for the domestic minimum tax calculation.
The 2025 Amendment Law includes other amendments to the QDMTT design, and expands the scope of the QDMTT to include stateless entities, main entities whose activities are carried out in the Czech Republic provided that these activities can be taxed in the Czech Republic under a relevant international treaty, and tax transparent entities established under Czech law that are not resident in any state.
The OECD Administrative Guidance also allows for more flexibility for the QDMTT design, but the Czech QDMTT is very similar to top-up tax for GloBE purposes. For instance, the OECD Administrative Guidance provides that:
-The QDMTT can be more restrictive than the GloBE Rules where the tighter restriction is consistent with local tax rules.
-The GloBE Loss Election, Substance-Based Income Exclusion and De Minimis rules do not need to be included.
For Czech QDMTT purposes none of these adjustments are made and the general GloBE rules apply.
The explanatory notes to the Law states that the Czech domestic minimum top-up tax is fully based on the requirements in the EU Directive and OECD Model Rules (including accompanying guidance such as the Commentary to the Model Rules and the OECD Administrative Guidance ). As such they assume that the Czech domestic minimum top-up tax will be classed as a QDMTT by both the EU and OECD.
Section 128a inserted by the 2025 Amendment Law provides that for the QDMTT top-up tax calculations, including the calculation of the ETR and currency conversion, the calculations are carried out with an accuracy of 6 decimal places.
Transitional Year
Section 141a inserted in the 2025 Amendment Law provides for the transitional year refreshing rule.
A new transition year, arises in an accounting period in which the entities of an MNE fall within the scope of a qualified IIR or UTPR if this accounting period begins after the beginning of the transition year for QDMTT purposes.
In the new transition year the following attributes of the relevant Constituent Entities are refreshed:
-Any Excess Negative Tax Expense Carry-forward under Article 4.1.5 or Article 5.2.1 is eliminated at the beginning of the new Transition Year.
-The DTL recapture rule in Article 4.4.4 does not apply to any deferred tax liability that was taken into account in computing the ETR under the QDMTT and that was not recaptured prior to the new Transition Year.
-Any GloBE Loss Deferred Tax Asset that arose in a year preceding the new Transition Year must be eliminated. The Filing Constituent Entity may make a new GloBE Loss election in the new Transition Year.
– Article 9.1.2 shall apply to transactions occurring after 30 November 2021 and before the beginning of the new Transition Year.
– If QDMTT was payable due to the application of Article 4.1.5 in respect of a deferred tax asset attributable to a tax loss, the deferred tax asset is not treated as arising from items excluded from the computation of GloBE Income or Loss under Chapter 3 of the OECD Model Rules.
Registration
The original draft Law required an MNE group to submit an application for registration for top-up tax no later than 15 days from the date on which they were liable. It also provided for a fine of up to CZK 1,500,000 for non-compliance with the registration obligation, under Section 247a of the Tax Code.
However, this was not included in the final enacted law.
Filing
Section 129 of the Law (as amended by the 2025 Amendment Law) requires an entity subject to the IIR, UTPR or QDMTT to submit an Information Return no later than 15 months after the end of the tax period (increased to 18 months for the first year). Article 151b inserted by the 2025 Amendment Law provides that the filing deadline cannot be before June 30, 2026.
Under Section 132 of the Law, an entity subject to the domestic minimum tax was required to submit a tax return no later than 10 months after the end of the tax period. An entity subject to the IIR or UTPR, was required to submit a tax return no later than 22 months after the end of the tax period.
The amended Section 132 of the 2025 Amendment Law unifies these deadlines so that the filing deadline for all top-up tax return purposes is 22 months after the end of the tax period.
Section 129b of the 2025 Amendment Law requires an additional information overview to be submitted with a tax return.
Section 127 of the Law requires an MNE that does not have its registered office in the territory of a member state, to appoint an agent for the filing of the top-up tax return.
Section 131 of the 2025 Amendment Law includes an exemption from the filing of an information return for the domestic minimum tax. No filing is required if a an Information Return for IIR/UTPR purposes is filed and it contains the information as required for the information return on the Czech top-up tax.
Penalties
A fine of up to CZK 1,500,000 may be imposed for non-compliance with the administration requirements, under Section 140 of the Law.
The general provisions of the Tax Code apply in relation to penalties. This includes interest on late payment under Section 252 of the Tax Code.
None Issued
| Czech Republic | |||
|---|---|---|---|
| Effective Date: | Accounting periods beginning on or after December 31, 2023 | ||
| Section/Article | |||
| First Set of OECD Administrative Guidance | |||
| 1.1 | Rebasing monetary thresholds in the GloBE Rules | 36 | |
| 1.2 | Deemed consolidation test | – | |
| 1.3 | Consolidated deferred tax amounts | – | |
| 1.4 | Sovereign wealth funds and the definition of Ultimate Parent Entity | 2025 law 6(5) | |
| 1.5 | Clarifying the definition of ‘Excluded Entity’ | – | |
| 1.6 | Meaning of ancillary for Non-Profit Organisations | – | |
| 2.1 | Intra-group transactions accounted at cost | – | |
| 2.2 | Excluded Equity Gains or Loss and hedges of investments in foreign operations | 2025 law 54b | |
| 2.3 | Excluded Dividends- Asymmetric treatment of dividends and distributions | 39 | |
| 2.4 | Debt release Election | 54 | |
| 2.5 | Accrued Pension Expenses | 2025 law, 40 |
|
| 2.6 | Covered Taxes on deemed distributions | – | |
| 2.7 | Excess Negative Tax Carry-forward guidance | 60 | |
| 2.8 | Substitute Loss carry forwards | 63 | |
| 2.9 | Equity Gain or loss inclusion election | 53 | |
| 2.9 | Qualified Ownership Interest/Flow through entity | 53(3) | |
| 2.1 | Allocation of taxes arising under a Blended CFC Tax Regimes | 2025 law, 151a | |
| 3.1 | Application of Taxable Distribution Method Election to Insurance Investment Entities | 2025 law, 75 | |
| 3.2 | Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity | 2025 law, 6 | |
| 3.3 | Restricted Tier 1 Capital | 47 | |
| 3.4 | Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders | 2025 law, 46 | |
| 3.5 | Simplification for Short-term Portfolio Shareholdings | 2025 law, 54a | |
| 3.6 | Application of Tax transparency election to Mutual insurance companies | – | |
| 4.1 | Deferred tax assets with respect to tax credits under Article 9.1.1 | – | |
| 4.2 | Applicability of Article 9.1.3 to transactions similar to asset transfers | draft law,141(4) |
|
| 4.3 | Asset carrying value and deferred taxes under 9.1.3 | – | |
| Second Set of OECD Administrative Guidance | |||
| 1 | Currency conversion rules | 2025 law 36 | |
| 2 | MTTCs | 17 (as amended by the 2025 law) | |
| 3 | SBIE Rules | ||
| – Foreign rules | 82 |
||
| Stock-based compensation election | – | ||
| Leases | – | ||
| – Impairment losses inc in tangible asset value | 81 | ||
| 4.1 | QDMTT Safe Harbour | 144, 2025 law 92a | |
| 4.2 | UTPR Safe Harbour | 148, 2025 law 92m | |
| Third Set of OECD Administrative Guidance | |||
| 1 | Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) | 2025 law, 92d | |
| 2.2.1 | Transitional CbCR – JVs | 2025 law, 92j | |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | 2025 law, 92d | |
| 2.3.2 | Transitional CbCR – Using different accounting standards | 2025 law, 92d | |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | 2025 law, 92d/92h | |
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | 2025 law,92l | |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | 2025 law, 92d | |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | 2025 law, 92h | |
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | 2025 law, 92d/92i | |
| 3.1 | Identifying Consolidated Revenue | 2025 law, 8(2) | |
| 3.2 | Mismatch between Fiscal Years of the UPE and another Constituent Entity | ||
| 3.3 | Mismatch between Fiscal Year and Tax Year of Constituent Entity | 2025 law 37a | |
| 4.2.1 | Blended CFCs -multiple GloBE Jurisdictional ETRs | 2025 law, 151a | |
| 4.2.2 | Blended CFCs – not required to calculate an ETR | 2025 law, 151a | |
| 4.2.3 | Blended CFCs – income of non-GloBE Entities | 2025 law, 151a | |
| 5.3 | 30 June 2026 Filing deadline | 2025 law, 151b | |
| 6 | NMCE Simplified Calcs | 2025 law, 92c (Permament simplified safe harbour, 92b) | |
| Fourth Set of OECD Administrative Guidance | |||
| 1.2.1 | Aggregate DTL Category basis | ||
| 1.2.1 | Exclusion of certain types of GL accounts and separate tracking | ||
| 1.2.1 | Exclusion of GL accounts that generate standalone DTAs | ||
| 1.2.1 | Exclusion of swinging accounts and separate tracking | ||
| 1.2.2 | FIFO/LIFO Basis | ||
| 1.2.3 | Aggregation of Short-term DTLs | ||
| 1.2.2 | Reversal of DTLs that accrued before the Transition Year | ||
| 1.2.2 | 5 year unclaimed accrual election | ||
| 2.1.2 | Recalculated deferred tax where GloBE carrying value differs from accounting carrying value | ||
| 2.1.2 | GloBE and accounting carrying values and the Transition Rules | ||
| 2.1.2 | Additional provisions for Intragroup transactions accounted for at cost | ||
| 2.1.2 | Exclusion of GloBE carrying value from SBIE | ||
| 3.1.3 | General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps | ||
| 3.1.3 | Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income | ||
| 3.1.3 | Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries | ||
| 4.1 | Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and rev hybrids | ||
| 4.2 | Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process | ||
| 4.2.2 | Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids | ||
| 4.2.3 | Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules | ||
| 5.2.2 | Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity | ||
| 5.3.2 | Non-group owners: Partially owned Flow-through Entities | ||
| 5.3.5 | Non-group owners: Indirect minority ownership | ||
| 5.4.2 | Taxes allocated to a flow-through entity | ||
| 5.5.2 | Hybrid entities – Taxes pushed down include indirect owners | ||
| 5.5.4 | Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system | ||
| 5.6.2 | Extension of taxes pushed down to include Reverse Hybrids | ||
| 6.1.4 | Option to exclude a Securitization Entity from scope of QDMTT | ||
| 6.1.4 | Option to not impose top-up tax liabilities on SPVs used in securitization transactions | ||
| 6.1.4 | Amendments to the Switch-Off rule | ||
| 6.1.4 | New definition: Securitization Entity | ||
| 6.1.4 | New definition: Securitization Arrangement | ||
| January 2025 OECD Administrtive Guidance | |||
| 1 | Articles 8.1.4 and 8.1.5 | ||
| 1 | Amendments to CbCR Safe Harbour for 9.1 | 2025 Law, 92g | |
| 1 | Amendments to QDMTT Safe Harbour for 9.1 | ||
| 1 | Article 9.1 of the GloBE Rules | 2025 Law, 241 | |
| 1 | Central Record of Legislation with Transitional Qualified Status |
| Note | Czech Republic | |
|---|---|---|
| QDMTT?(Enacted/Draft) | Is there a QDMTT in the Legislation? | Yes – Enacted |
| Effective Date: | Accounting periods beginning on or after December 31, 2023 | |
| Administrative Guidance/Safe Harbour Guidance? | Are the provisions of the OECD Administrative Guidance and Safe Harbour Guidance reflected in the current legislation? | Included |
| Separate/Transposed QDMTT | Is the QDMTT a Separate QDMTT or a Transposition of the GloBE Rules (with Amendments) | Transposed |
| Domestic Groups | A QDMTT can also apply to purely domestic groups. | Yes – Section 119 |
| Scope Definitions | The definitions of Ultimate Parent Entity, MNE Group, and Constituent Entity correspond with the definitions in the GloBE Rules. | Yes – Transposed under Section 119 |
| Income and covered taxes of Constituent Entities | The QDMTT must compute the tax liability for the jurisdiction by taking into account the income and covered taxes of Constituent Entities under the GloBE Rules. | Yes – Transposed under Section 119 |
| Separate ETRs | A QDMTT must determine a separate ETR and Top-up Tax amount for MOCEs, Joint Ventures and JV Subsidiaries. | Yes – Transposed under Section 119 |
| Charging | A QDMTT must impose a Top-up Tax on one or more domestic Constituent Entities on the Excess Profits of all domestic Constituent Entities, including the domestic Parent Entity. | Yes – Transposed under Section 119 |
| Enforceability | The legal liability for the domestic top-up tax needs to be enforceable against at least one Constituent Entity in the jurisdiction. | Yes – Transposed under Section 119 |
| Different Accounting Standard? – Optional | Is the use of a local accounting standard optional? | No |
| Different Accounting Standard? – Mandatory | Is the AG2 guidance followed? | No |
| Different Accounting Standard? – Default GloBE rules | Do the general GloBE rules apply for the QDMTT accounting standard? | Yes |
| Require 100% ownership? | The QDMTT )can require 100% ownership | No |
| Differences to GloBE Rules: tighter restriction is consistent with local tax rules | The QDMTT can be more restrictive than the GloBE Rules where the tighter restriction is consistent with local tax rules. | None |
| Differences to GloBE Rules: Not relevant to in the context of its domestic tax system | The QDMTT can exclude adjustments that are not relevant to in the context of its domestic tax system. | None |
| Income/Loss of a PE | The QDMTT must exclude the income or loss of a foreign Permanent Establishment from the income or loss of the Main Entity. | Yes – Transposed under Section 119 |
| Tax Transparency | A QDMTT must include certain tax transparent provisions. | Yes – Transposed under Section 119/ draft law 117 |
| Adjusted Covered Taxes Consistency | The range of taxes included in Covered Taxes needs to be the same or narrower, as under the GloBE rules. | Yes – Transposed under Section 119 |
| GloBE Loss Election? | Not Required in QDMTT | Yes – Transposed under Section 119 |
| No Pushdown to CFC or PE | A QDMTT must exclude: (1) tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules and (2) tax paid or incurred by a Main Entity that is allocated to a PE in the jurisdiction. | Yes – Section 122/ draft law 119(3) |
| Exclude tax allocated to Hybrids | Second AG Guidance | Yes – 2025 Amendment Law |
| Exclude allocated net basis tax on dividends (except WHT) | Second AG Guidance | Yes – 2025 Amendment Law |
| UPE that is a Flow-Through Entity | Second AG Guidance | Yes – Transposed under Section 119 |
| UPE subject to Deductible Dividend Regime | Second AG Guidance | Yes – Transposed under Section 119 |
| Eligible Distribution Tax Systems | Second AG Guidance | Yes – Transposed under Section 119 |
| ETR Computation for Investment Entities | Second AG Guidance | Yes – Transposed under Section 119 |
| Investment Entity Tax Transparency Election | Second AG Guidance | Yes – Transposed under Section 119 |
| Taxable Distribution Method Election | Second AG Guidance | Yes – Transposed under Section 119 |
| Multi-Parented MNE Groups | Second AG Guidance | Yes – Transposed under Section 119 |
| Additional Top-Up Tax/Excess Negative Tax Expense | A QDMTT needs to have provisions for additional top-up tax where there is no Net GloBE Income and the Adjusted Covered are less than zero and less than the Expected Adjusted Covered Taxes. Amount. Excess Negative Tax Carry-forward rules also need to be in place. | Yes |
| Modified Top-Up Tax Formula | The QDMTT top-up tax formula needs to be modified as the GloBE Rules subtract tax paid under a QDMTT from the current GloBE Top-up Tax. | Yes, Section 122 |
| Same Approach As GloBE Rules | A QDMTT must require that top-up tax is taken into account by the relevant Constituent Entity at the same time and in the same manner as under the GloBE Rules (eg it can’t be carried forward). | Yes – Transposed under Section 119 |
| SBIE Included? | Not Required in QDMTT | Yes – Transposed under Section 119 |
| SBIE Rates same as GloBE? | Not Required in QDMTT | Yes – Transposed under Section 119 |
| De Minimis Rule Included? | Not Required in QDMTT | Yes – Transposed under Section 119 |
| Restructuring Rules? | A QDMTT needs to include restructuring rules as provided in the GloBE rules to the extent necessary to conform to the tax reorganization rules in the jurisdiction. | Yes – Transposed under Section 119 |
| Safe Harbours? | A QDMTT needs to contain GloBE safe harbours. | Yes – Transposed under Section 119 |
| Deferred Tax Transition Rule? | A QDMTT must include the deferred tax starting point under Article 9.1.1 of the Model Rules. | Yes – Transposed under Section 119 |
| SBIE Transitional Rates? | Not Required in QDMTT | Yes – Transposed under Section 119 |
| Initial Phase of International Activity Exemption | Not Required in QDMTT | Yes – Transposed under Section 119 |
| Elections? | Where the GloBE Rules permit an election, a QDMTT must generally also provide for the election and require the MNE Group to make the same election under the QDMTT as is made under the GloBE Rules. | Yes – Transposed under Section 119 |
| Deferred Tax transition: First time or refreshing rule? | Second AG | Yes – 2025 Amendment Law |
| New transition year – amend tax attributes? | Second AG | Yes – 2025 Amendment Law |
| Currency provisions? | Second AG | Yes – 2025 Amendment Law |
| DTL Recapture rules – Aggregate DTL Categories | Fourth AG, 1.2.8 | |
| DTL Recapture rules Unclaimed Accrual Five-Year Election | Fourth AG, 1.2.8 | |
| Reverse Hybrid Pushdown | Fourth AG, 5.6.2 | |
| Securitization Entities – A QDMTT may also exclude a Securitisation Entity from its scope | Fourth AG, 6.1.4 | |
| Securitization Entities – A jurisdiction may allocate the QDMTT liability for any QDMTT top-up tax to another Constituent Entity (if any) that is located in the jurisdiction | Fourth AG, 6.1.4 | |
| Note |
| Czech Republic | ||
|---|---|---|
| Effective Date: | Accounting periods beginning on or after December 31, 2023 | |
| Section/Article | ||
| Safe Harbour & Penalty Relief Guidance | De Minimis Test | 145(2) |
| Safe Harbour & Penalty Relief Guidance | Simplified ETR Test | 145(2) |
| Safe Harbour & Penalty Relief Guidance | Routine Profits Test | 145(2) |
| Safe Harbour & Penalty Relief Guidance | Simplified Covered Tax defn (inc exclusion of uncertain tax positions) | 143 |
| Safe Harbour & Penalty Relief Guidance | Simplified ETR defn | 145(3) |
| Safe Harbour & Penalty Relief Guidance | Transition Period | 143 |
| Safe Harbour & Penalty Relief Guidance | Transition Rate | 143 |
| Safe Harbour & Penalty Relief Guidance | Defn of Qualified Financial Statements | 143 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Joint Ventures | 146(1) |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Tax Neutral UPEs | 146(2) |
| Safe Harbour & Penalty Relief Guidance | Special Rules for Investment Entities and their Constituent Entity-owners | 146(5) |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Net Unrealised Fair Value Loss | 146(6) |
| Safe Harbour & Penalty Relief Guidance | Exclusions | 146(7) |
| December 2023 OECD Administrative Guidance | ||
| 1 | Transitional CbCR – Purchase Accounting Adjustments(consistent reporting condition, goodwill impairment adjustment) | 2025 law, 92d |
| 2.2.1 | Transitional CbCR – JVs | 2025 law, 92j |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | 2025 law, 92d |
| 2.3.2 | Transitional CbCR – Using different accounting standards | 2025 law, 92d |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | 2025 law, 92d/92h |
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | 2025 law,92l |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | 2025 law, 92d |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | 2025 law, 92h |
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | 2025 law, 92d/92i |
| January 2025 OECD Administrtive Guidance | ||
| Amendments to CbCR Safe Harbour for 9.1 |
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