Accounting, paying taxes and paying wages to employees in euros, dollars or pounds. Companies with most of their sales in foreign currencies will get such an option in the new year, and accounting in crowns does not make much sense to them. However, the proposal, which is part of the government’s consolidation package, is not entirely far-fetched. From the point of view of some, it is also a compromise step to get closer to the euro, but without joining the eurozone.
The amendment to the Accounting Act will allow entrepreneurs who have most of their sales in currencies other than crowns to keep their accounts in this currency from January, as well as pay income tax and pay wages to employees.
The law introduces a new institute of the so-called functional currency. This is the currency in which the company conducts most of its accounting activities. It is therefore the currency that most influences the prices of goods and services. Other criteria may also be the extent to which the currency affects wages and other costs that must be incurred in the production and sale of goods and the provision of services, or the proportion of transactions carried out in that currency higher than 50 percent.
“From the point of view of companies, this is certainly a welcome expansion of the options for calculating and paying taxes. The reason for the current timing of this step is probably the fact that some parties in the current government coalition are relatively supportive of the Czech Republic’s transition to the euro. So it is a kind of compromise in the style of a smart burner – the Czech economy will move from the koruna towards the euro, but without entering the eurozone,” commented Michal Skořepa, Chief Economist of Česká spořitelna, on the news for the daily Echo24.
The attitude of business entities towards the adoption of the euro varies, but a negative attitude still prevails. According to Pavel Drobil, the representative for the adoption of the euro within the Union of Industry and Transport, the full adoption of the euro in the Czech Republic could be managed by the end of this decade. On the contrary, according to its surveys, the Chamber of Commerce states that roughly 75 percent of entrepreneurs do not agree with the imminent date for entry into the eurozone.
However, the possibility to charge in euros, pounds or dollars will not be completely perfect yet, because companies will still have to fill out tax returns in crowns. The payment will therefore be able to be sent in a foreign currency, but the entered data will remain in crowns. According to the Financial Administration, the current tax information system is not capable of making changes.
However, according to Skořepá, this should not be a significant burden for companies. “I assume that the obligation to fill out tax returns in crowns will not be a major problem for companies. Moreover, according to the Ministry of Finance, this is only a temporary situation that will end as soon as the tax administration is technically ready to process tax returns in foreign currencies,” believes Skořepa.