Tax treatment of donations for flood relief and forgiveness of penalties for control statements

The Financial Administration has issued information on donations made for flood relief. According to this information, donations made for humanitarian or charitable purposes or from public collections are exempt from personal income tax. Gifts made by employers to their employees are also exempt. The individual will not have to include this income in his/her tax return. However, in the case of a gratuitous transaction in excess of EUR 5 million. CZK 5, the donor is obliged to report this income to the tax administrator by the end of the deadline for filing the tax return.

From the donors' point of view, the value of the donations can be deducted from the tax base if the statutory conditions are met. These are donations that are made to specified recipients (municipalities, regions, legal entities and others) and for specified purposes (humanitarian, medical, charitable, etc.) under the Income Tax Act. Another option allowed by the law is the application of expenses incurred for donations as tax deductible expenses under Section 24(2)(zp) of the Income Tax Act. Based on this provision, expenses provided in the form of non-monetary benefits in connection with the elimination of the consequences of natural disasters are considered tax deductible expenses. For the sake of completeness, we would like to add that these expenses cannot subsequently be deducted from the tax base again.

In relation to the value added tax, the Ministry of Finance has also decided to waive the fine for breach of obligations related to the control report due to flood or flood damage as of 12 September 2024. The affected value added tax payers will be waived a fine of CZK 1,000 for failure to submit the control report within the prescribed time limit if the submission is made subsequently without being requested by the tax administrator.  The fine will be waived only for taxpayers who have been affected by floods and notify the tax administrator by 25 November 2024 at the latest. The remission also applies to taxpayers who were not affected by the event but whose control report is processed by the person affected by the emergency.

If you have any questions, please do not hesitate to contact the PKF APOGEO Tax team.

Translated with DeepL.com (free version)