We would like to present you some news from the field of legislation and case law from December 2024 and the preceding months. We will keep you informed of further changes in the coming months.
Financial markets and investments
Act on the digitalisation of the financial market
On 6 December 2024, the Chamber of Deputies approved the government's bill on the digitalisation of the financial market in its third reading. The bill is currently under consideration by the Senate. It could come into force in February or March this year. The law is an implementation of relevant European directives and regulations. It should bring cryptocurrencies closer and more equal to traditional investment assets. Under the law, cryptocurrency traders will be subject to supervision by the Czech National Bank (which will maintain lists of cryptocurrencies and their issuers and providers), subject to rules on professional competence, as well as information obligations in relation to investors and the obligation to collect data on buyers and sellers to prevent money laundering.
The law also seeks to protect the owners of crypto-assets by, for example, ensuring that in the event of foreclosure or insolvency of token issuers and those entrusted with third-party crypto-assets, it will not be possible to seize these funds. At the same time, providers of cryptoasset-related services will have to ensure that the adequacy of the protection of the funds entrusted to them is assessed annually by an auditor and submit their financial statements to the Czech National Bank, which will also have to be audited. The Czech National Bank will be able to punish breaches of its obligations under the Act with heavy fines and the imposition of interim and corrective measures.
Owners of cryptocurrencies will be able to exempt income from the transfer of a cryptoasset for consideration if the aggregate of the related income does not exceed 100 000 CZK in a calendar year or if the cryptoasset is held for at least three years. Otherwise, the taxation of income from crypto-assets will be similar to the taxation of income from the sale of securities.
Taxes and social security
Deferment of advance payments of social insurance for start-up entrepreneurs
On 1 January 2025, an amendment to the Act on Social Security Contributions and State Employment Policy Contributions (Act No. 436/2024 Coll.) came into force, which allows relief for start-up entrepreneurs who have not entered the flat-rate regime. These entrepreneurs will not have to pay advance payments of social insurance premiums in the year of starting their self-employment and in the year immediately following. However, the remission applies only to advances and additional payments. A start-up entrepreneur who makes use of this option will have to pay the premiums in full at the end of the calendar year for which the premiums are payable, at the time of the annual return. Under the amendment, former entrepreneurs who have not been self-employed for at least five previous years will also be considered to be new entrepreneurs.
SDEU opět k vymezení pojmu „stavba pro bydlení“
The Court of Justice of the European Union (CJEU) in its judgment of 7 November 2024, Lomoco Development ApS, C-594/23, again dealt with the definition of the concept of 'residential building' for VAT purposes. In that case, a Danish company sold land on which no building had yet stood, but the connection to the utilities had already been established and the foundations dug. The company did not deduct value added tax from the price because, in its view, the land was undeveloped and not a residential building to be built on the land in the future. The CJEU concluded, however, that the supply of land on which, at the time of the supply, only the foundations of a residential building are located constitutes a supply of 'building land' and such a supply is nevertheless subject to VAT. However, it is not a 'residential building' because, according to the CJEU, the foundations cannot be regarded as a building or part of a building.
Others
Amendment Lex Ukraine
On 18 December 2024, the Chamber of Deputies approved in its third reading the draft amendment to the so-called lex Ukrajina (Act No. 65/2022 Coll., on certain measures in connection with the armed conflict on the territory of Ukraine caused by the invasion of the Russian Federation troops). The amendment is intended to allow Ukrainian refugees with temporary protection to apply for long-term residence, or to allow further extension of the temporary protection regime for those who continue to need it. The long-term residence permit will be conditioned primarily on the applicant's good character, economic self-sufficiency, independence from the benefit system and residence in the Czech Republic for at least 2 years. Families will have to register and meet the conditions for long-term residence together. Holders of long-term residence permits will retain free access to the labour market and education in accordance with Acts 66/2022 and 67/2022.
The amendment also introduces other innovations - specifically, it makes the acquisition of Czech citizenship by an applicant from the Russian Federation conditional on the submission of proof of the loss of Russian citizenship, allows school directors to set a different date for foreigners to enrol in primary education, extends the possibility of deducting donations to Ukraine from the tax base, removes the suspensive effect of objections to registration on the national sanctions list, and extends the validity of all three laws adopted in connection with the Russian invasion indefinitely.
Finally, we would like to mention that the amendment adds to the Criminal Code another offence - the offence of unauthorised activity for foreign power (§ 318a).
The Supreme Administrative Court ruled in favour of the whistleblower
The Supreme Administrative Court (SAC) recently decided on a case involving the former chairman of the Office for Access to Transport Infrastructure (ÚPDI), who sent a letter to the European Commission warning of a possible violation of European law in connection with the transfer of the ownership of land from Czech Railways to the Railway Administration. At the same time, the person in question succeeded in the selection procedure for the next term of office of the chairman of the ÚPDI, but the draft government resolution on his reappointment was eventually withdrawn due to the alleged merger of the ÚPDI's agendas with the Office for the Protection of Competition. However, it emerged in the proceedings that the Minister for Transport notified the applicant immediately after he had discovered that the applicant had sent the relevant letter to the Commission that the proposal for his appointment would be withdrawn. In its judgment of 5 December 2024, No 3 As 309/2023-83, the Supreme Administrative Court (SAC) has now upheld the legal opinion of the Municipal Court in Prague that the letter was a notification within the meaning of the EU Whistleblowing Directive and that the withdrawal of the proposal to appoint the applicant as chairman of the Office for the Protection of Competition fulfilled the characteristics of prohibited retaliation in that context. According to the SAC, although the applicant was not legally entitled to the appointment, he was entitled to a transparent procedure based on objective criteria.
