Updates on the Accounting & Tax Legislation in the Czech Republic.

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Updates on the Accounting & Tax Legislation in the Czech Republic.

Co-authored by Mr. Jiri Dubovsky

Amendment to the Accounting Procedures for Entrepreneurs

In November 2001 the minister of finance of the Czech Republic approved the amendment to the Accounting Procedures for Entrepreneurs. It is one of the most extensive amendments that emerges from the long-expected and already approved amendment to the Accounting Act No.?353/2001 Coll. and that came into?effect along with it on 01 January 2002.

We would like to summarise the most significant new provisions that have been approved.

Change of Accounting and Valuation (Section 4 (9) and 7 (4) of the Accounting Act)

The change of the way of accounting and valuation must be accounted as an extraordinary expense or?extraordinary revenue at the beginning of the accounting period (Article IV Section I/4 of?the?Introductory Provisions).

Transformations / Mergers of Companies (Section 27 (1) (d) of the Accounting Act)

The change of the legal form does not effect the change of the valuation of assets and liabilities.

In case of merger of companies, the dissolving company performs re-valuation of assets if it is prescribed by the Commercial Code (through the account 418). The succession company prepares the opening balance sheet and?appendix, which (both of them) have to be audited.

Sale of the Company

The sales price shall be accounted on the account 688 as extraordinary revenue while the sold assets and liabilities shall be recorded balanced on the account 588 as extraordinary expense...

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