Legal news 12/2018

1. DECEMBER 2018 LEGAL NEWS
Dear clients, let us to introduce several news from Czech legislation and judicial decisions appeared
during October and November 2018. We will inform you about next changes soon.
+ Taxes changes for 2019
The Chamber of Deputies approved the
Amendment of several tax laws in response to
particular EU legislation. As most important,
we considered following changes: income from
the sale of investment instrument and other
than proprietary rights registered in the Czech
Republic, incomes from the sale of movable
business property of permanent business
premises and incomes from the relocation of
property to foreign countries without a change
of the owner will be considered as the source
of income. The Amendment also intends to
change the way of tax calculation in case of
delivery of goods and provision of the services.
The Amendment further modifies the issue of
limitation of recognition excessive borrowing
costs and exceptions from such a limitation. It
also plans to stipulate a duty to inform about
incomes leading to foreign countries and
taxation of a controlled foreign. The intention
of the Amendment is also to amend the VAT
Act in reaction to EU judicial decisions
concerning financial leasing. The leaving of
goods to use on the basis of a contract will be
considered as supply of goods, if so stipulated
and if it is obvious by the day of the contract
and that the transfer of the property right after
the lease is the only reasonable economic
choice. This provision is supposed to come into
operation from 1st
January 2020, especially to
give enough time to the interested subjects to
prepare themselves for this change. The issue
of the voucher and total tax voucher will also
be modified.
The Amendment implements the ATAD
directive which introduces the general anti-
abuse rule to modify the situations when tax
subject carries out the transactions with the
intention of reducing the tax duty.
+ OECD and measures to fight against reduction of tax base and moving of
profits in relation to tax contract
On 20th
December The Senate gave agreement
with ratification of Multilateral Convention to
Implement Tax Treaty Related Measures to
Prevent Base Erosion and Profit Shifting (MLI).
MLI introduces singular rules of disposition
with hybrid inconsistencies, rules for
permanent business premises determination
and allocation of profit for the permanent
business premises as well as singular rules
against abuse of provisions from double-
taxation conventions. The measures for
contractual conflict based on the obligatory
conciliation proceeding are also the part of the
MLI. The Czech Republic reserved a right to
minimal standards introduction. It means only
limited impacts on the business.
+ Office for personal data protection amended the instructions for DPOs
The qualification requirements of GDPR for
DPOs’ are determined also by the controller´s
main activities. If there is an external DPO, it
must comply with all requirements from
articles 37 – 39. A group of persons working for
this subject can effectively carry out the DPO´s

2. duties as a team for which is responsible the
determined main contact and the “responsible
person of client”, who is notified to the Office
for personal data protection. In this case it is
necessary that every member of external
organisation executing the DPO meets
requirements according to GDPR. In the
interest of legal clarity and good organisation,
it is recommended to separate clearly the tasks
for external team of DPOs.
+ Trademark news
With the efficiency from 1st
January 2019 an
Act amending the contemporary trademark
legislation was…?co. The new Act simplifies the
registration and administration of trademarks.
It also enables to register untraditional
trademarks, e. g. acoustic, moving, multimedia
or holographic ones. It also introduces an
increase of trademark owners’ duties,
particularly a duty to file an objection against
registration of equal trademark. On the other
hand, the procedure of registration by the
Industrial Property Office (ÚPV) of a trademark,
which took many months until now, should
became more efficient.
From judicial decisions:
+ Reduction of registered capital
According to the decision of the Supreme
Court, the decision of general meeting about
the reduction of registered capital does not
have to contain both reasons and purpose of a
proposed reduction but the reason followed by
the resolution is sufficient.
+ Tax can be additionally assessed even if the tax control was unlawful
In the considered case, the Supreme
Administrative Court ruled that between a
failure to issue a call for additionally tax return
by the tax authority and additionally assessed
fine has not be a direct connection. A tax
subject during the whole tax proceeding
inveighed against the reasons of assessing the
tax, therefore the tax authority reasonably
supposed that he would have not followed the
call even if it were issued. The tax control
would have follow even in case the tax
authority proceeded properly and issued a call.
It seems apparent that the failure to issue the
call for additionally tax return does not have to
have an influence on the legality of
subsequently issued tax assessment. According
to the court, the tax subjects should actively
defend themselves against the decision of tax
authority immediately after initiation of tax
control and then a termination of such a
control as an unlawful intervention can be
achieved.
+ An Adequacy of a fine from competitive clause in an employment contract

3. The Supreme Court considered a case of an
employee with concluded competitive clause
who ended the Employment Contract after and
concluded a new employment contract with
her former employer´s competitor next month,
but the employment lasted for only 3 days. The
former employer wanted her to pay the fine
according to the competitive clause. The
Supreme Court designated this claim as
contrary to good manners because the
employment contract with the new employer
lasted for only 3 days.
+ An Evaluation of proposed evidence for a certain purpose
The Supreme Administrative Court solved the
case of Czech company exporting cars to
Cambodia through a Belgian customs agent.
The Belgian customs agent is same as
Cambodian customs body empowered to
introduce the goods to import customs regime.
Czech tax authority wanted the controlled
company to prove this fact. The company was
not able to do so and tax authority decided it
did not bore the burden of proof. The court
stated that the tax authority does not has to
doubt on the proposed evidence proving a
release of goods to import regime without
declaring explicitly reason. If the taxpayer
proposes an evidence during a tax proceeding,
the tax authority is obliged to evaluate them
separately and in mutual connections. In case
of any doubt about every singular evidence, the
tax authority can send a call to the taxpayer to
present next evidence. It is not possible to
evaluate the evidence for the certain purpose,
especially to pass side-lined the evidence in
favour of the taxpayer and raise those that
disfavoured the taxpayer.
Do not hesitate to contact us with any particular question.
We will inform you about next legal news.