In a historic move, the House of Commons has approved government amendments that will provide individuals, sole traders, and companies with an extraordinary opportunity to have their tax and social security penalties and related charges completely forgiven. This groundbreaking initiative, designed to alleviate the financial burden on debtors, comes as a result of the final round of voting on Wednesday and is now set to move forward to the Senate for further consideration.

“This is a one-time occurrence. Building upon the lessons from previous grace periods, we are extending this from July 1 to November 30. The entire debt must be paid in full. The grace period can be availed if the debt to the Czech Social Security Administration (CSSA) is settled by November 30. The benefit entails the forgiveness of interest on delayed payments, penalties, and other associated costs,” stated Marek Výborný, chairman of the People’s Party parliamentary group.

The relief, which is expected to impact up to 715,000 individuals and 265,000 companies, carries an estimated total forgiveness amount of CZK 18 billion, encompassing penalties and related costs. Debtors will need to settle their social security debt in full, and in return, the state will pardon all penalties and enforcement expenses. The application process will be accessible through the authority’s portal from July to November.

This program is applicable to debts incurred prior to September 30 of the previous year and does not include newly incurred debts. Unlike previous grace periods, debtors will have the option to pay off their debts in installments. Debts amounting to CZK 50,000 can be spread over twelve installments, while larger debts will be payable over sixty installments, spanning five years. However, it’s important to note that the first installment must be submitted this year, and penalties will not be forgiven if any installments are missed.

Furthermore, in a related government amendment, the House of Commons also approved the forgiveness of interest on tax arrears during its final deliberations. Individuals who settle their principal tax amount between July and November and have incurred debt by the end of the previous September will be eligible for the forgiveness of penalties and interest upon formal request.

This comprehensive amendment also covers the waiver of court fees and local charges, such as those for waste disposal, graves, and dog licenses. Additionally, it allows for the clearance of minor tax arrears incurred until the end of the previous September, applicable to individuals and businesses owing less than 200 crowns in taxes, interest, and penalties.

For debts exceeding CZK 5,000, payment options include spreading the amount over four installments, with the first installment due by the end of November this year and the remaining three in the following year.

Notably, both government amendments received unanimous support from MPs across all political factions, with no opposing votes. These bills will now advance to the Senate for further deliberation and eventually to the President of the Republic for signature. This move represents a significant effort by the government to provide much-needed financial relief to individuals and businesses grappling with tax and social security debts, particularly in the wake of economic challenges brought about by the ongoing pandemic.

Article by Prague Forum