The tax reform envisaged by the Czech legislator also comprises important changes to the thin-capitalisation rules, which will become effective from the beginning of next year.
At the end of October, the Senate passed the amendment to the Insolvency Act incorporating also temporary provisions regulating thin capitalisation. According to this provision, the current legal regulation of thin capitalisation will also apply to loans and credits negotiated before or on 31 December 2007 in the 2008/2009 transitional period or in the fiscal periods that begin in these years. Therefore loans negotiated before the end of 2007 will be governed by the current legal regulations (i.e., the regulations valid until the end of 2007) until 1 January 2010.
On the other hand, however, if an amendment to these “old” credits and loans is concluded that changes the amount of credit or loan provided or the amount of interest to be paid, then the provisions valid from 1 January 2008 will be used for both credits and loans negotiated from 2008 onwards.
This temporary provision should also enable exemptions from the thin-capitalisation rules to be maintained for credits and loans that were received from affiliated companies up to the end of 2003. These exemptions would, thus, also be maintained for the above-mentioned transitional period.
The Czech Ministry of Finance has unofficially provided for publishing instructions for the new thin-capitalisation rules sufficiently in advance in order to enable taxpayers to adjust their tax affairs and avoid tax losses. In case the instructions do not clarify all problematic areas, a contribution is prepared for the coordinating committee of the Chamber of Tax Advisors, which resolves uncertainties in the new regulations.
As of 1 January 2008 a new wage calculation method will come into effect that will radically change the current one. Any errors will be subject to the payment of a fine.
In the field of personal income tax, the super-gross wage, non-deductibility of insurance when calculating the tax base, changes in taxation of employee benefits and adjustment of their limits will be introduced. As far as social and health insurance is concerned, a  cap for social and health insurance, the expansion of the assessment base (e.g. use of passenger cars for private purposes) will come into effect.