The amendment to the Act on Local Fees approved

Napsal/a Klára Stárek Zachariášová | 10.30.2019
Our positions

The amendment to the Act on Local Fees was approved by the Czech Chamber of Deputies and the Act has been endorsed by the President. These days it should be published in the Collection of Laws tomorrow or on Friday, to be subsequently discussed at meetings of the councils of the individual cities and municipalities, which will then transpose some of its provisions into the generally binding public decrees.

These are the most important changes instituted by the amendment:

  1. The Act shall be effective from 1.1.2020.
  2. Aggregation of the multiple capacity charges applied so far (formerly paid by the hotel for each and every bed used) + the spa and recreation fee (formerly paid by the guest up to a maximum amount of CZK 15 – in accordance with the municipal regulations, for the recreational and spa purposes) into one residence fee.
  3. The payer of the residence fee will be the guest (he/she will actually pay it) – i.e. a natural person staying within the municipality for the purpose of a short-term paid-for stay (a short-term stay shall mean a stay of a maximum length of 60 consecutive calendar days). The accommodation facility is just a tributary (transferor) - the fee is collected by the facility and forwarded to the municipality.
  4. The amount of the residence fee – shall be determined by the municipalities through generally binding public decrees. The maximum amount shall be CZK 21 (the effective period shall be stated by the individual decrees adopted by the towns and municipalities), while the maximum amount of CZK 50 shall apply from 1.1.2021.
  5. Calculation of the fee – number of the started days multiplied by the fee rate.
  6. Exemption from the fee - the purpose of the stay is no longer decisive. In summary, the following entities are exempted: blind persons, ZTP/P card holders, persons under 18 years of age, persons looking after children at a recovery event, persons performing seasonal works, persons residing within the municipality at institutional or protective care facilities, at a facility used for the persons in danger, persons performing rescue works, members of security corps, soldiers, state employees in facilities owned by the Czech Republic and persons hospitalized within the municipality at a health care facility operated by a bed-care provider with the exception of a person receiving spa medical-rehabilitation treatment: a) care paid for under the law governing public health insurance, or b) care not covered by public health insurance. The municipality can adjust these through a decree.

 The AHR would like to reiterate the need for accommodation providers to keep the residence fee separated from the base price charged for the accommodation, the same as it is routinely done in other tourist destinations. It follows from the definition of the residence fee itself that such a fee is not to be included in the value-added tax base pertaining to the accommodation provided since the guest is the payer and the hotel is the tributary (transferor) of the fee. It is not a cost item for the hotel either, but rather a sum of collected money that is being passed on. From the hotel’s accounting perspective, it is, therefore, a so-called “current item”, with the fee appearing in the balance sheet accounts. In such a case, the hotel should have set a fixed price for the accommodation, excluding the residence fee in question. Also, whenever concluding contracts with customers, the price charged for the services provided should contain the price of the accommodation without the fee. Thus there will be no doubt about it that this fee is outside the scope of the tax pertaining to the accommodation provided. If you included the fee in your accommodation price, you would be quite illogically paying commission to intermediaries, OTAs, and VAT on the fee.

As you surely know, this Act has been subject to quite a few technical and political debates along with its formation, so we are very pleased that we have succeeded in promoting the originally suggested version and in eliminating the attempts to introduce an extreme step increase in the residence fee rate.

Earlier this summer, we have released a methodological recommendation on local fees, with the document being presently commented on by the Ministry of Finance with an eye to the already passed amendment to the Act, and its full version will be sent to you as soon as possible. We will also inform you about the date of a workshop organized on this topic.


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