BEPS project to be implemented in some tax treaties with effect from september 1st, 2020

Authors: JUDr. Martin Šubrt, Ph.D., LL.M., Mgr. Ondřej Křížek, Mgr. Martin Dolnák

The Czech Republic has implemented the BEPS Project in relation to Czech double taxation treaties, applying them as minimum standards. In this regard, particular double taxation treaties will see changes related to the new wording of the preamble, as well as a rule against abuse in the form of the principal purpose test, or some new amendments to the conciliation procedure for the resolution of any disputes arising from these treaties. It can be assumed that further measures aimed at preventing aggressive tax planning and resulting from this project will become a part of double taxation treaties through bilateral negotiations with specific contracting states.

In this context, the Ministry of Finance has announced that from the 1st of September 2020, a Multilateral Instrument (“MLI”) will implement BEPS in the double taxation treaties with the following states: Australia, Austria, Belgium, Canada, Cyprus, Denmark, Finland, France, Georgia, Great Britain, Iceland, India, Ireland, Israel, Japan, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Norway, Poland, Portugal, Russia, Serbia, Singapore, Slovakia, Slovenia, Sweden and Switzerland.

Information on specific changes to individual treaties will be published on an ongoing basis by the Ministry of Finance of the Czech Republic in the Financial Newsletter.

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