Tax benefit related to enforcement procedure termination

The recent amendment of the Enforcement Code brought with it changes to the Income Tax Act. Income tax payers will now be entitled to an income tax rebate if the enforcement proceedings in which they act as beneficiaries are discontinued and several other conditions are met.

First, the enforcement proceeding has to been pending for at least three years without any success. In such a case, the bailiff should invite the creditor to make an advance on the costs of the execution. If the beneficiary chooses not to make the deposit, the bailiff shall discontinue the proceedings. The suspension of the enforcement proceedings on this basis will entitle the creditor to a compensation of 30 % of the debt, excluding any attachments. However, there is a catch. The legislator has, quite naturally, decided to limit the number of enforcement proceedings on the basis of which the creditor will be entitled to such compensation and, consequently, the amount of compensation claimed. Another condition that must thus be met is that the claim to be recovered in the proceedings must be in the maximum amount of CZK 1,500 without any accessories.

This compensation will not be paid to creditors. It will only be provided in the form of an income tax rebate. The maximum amount of this discount is, in view of the aforementioned, CZK 450 per one stayed enforcement proceeding. However, the discount must be applied in the same tax year in which the enforcement proceedings in question were discontinued. Otherwise, the discount will be forfeited.

Both natural persons and legal entities are entitled to compensation in the event of termination of enforcement proceedings. Potentially, therefore, this novelty may be interesting for those of our clients who have a large number of very low claims against their debtors that meet the above requirements.

 

The legitimacy of religious, philosophical and political neutrality at the workplace

In a relatively recent decision, the Court of Justice of the European Union addressed a very sensitive issue, namely the question of religious neutrality at the workplace. In that decision, the Court answered whether persons who follow certain dress codes for religious reasons are discriminated against where an employer's internal rules prohibit employees from wearing visible symbols of political philosophical or religious beliefs at the workplace.

The Court has emphasised that such a rule must apply equally to all employees. If that condition is met, the Court considers that there cannot be direct discrimination, even though such a rule may cause inconvenience to some employees. Thus, if an employer treats all employees equally and indiscriminately by requiring them all to wear neutral clothing, this is merely an expression of the employer's political, philosophical and religious neutrality.

However, the Court acknowledged that this may be a case of indirect discrimination and considered whether the religious neutrality of the employer in such a case is a legitimate aim and whether indirect discrimination arising from internal rules is therefore justified. In that regard, it held that religious neutrality can be a legitimate aim, but only if the employer has a genuine and justified need for its employees to act neutrally in those respects.

Last but not least, the Court answered the question whether only the wearing of distinctive and large symbols of religious, philosophical, and political beliefs can be prohibited at the workplace. The Court held that, in such a case, there would already be direct discrimination, since the wearing of such symbols is attributed only to certain groups and, therefore, such a rule would have a negative effect only against them, which cannot be permitted.

If your customers expect neutrality with respect to religion or philosophical and political beliefs in business transactions, it is therefore possible to require your employees to observe such neutrality at the workplace.

 

Shareholders taking responsibility for the decisions of the statutory body

How can the limits of the statutory body's authority be set within the company and is it permissible and under what circumstances for shareholders to instruct the statutory body on how to decide in a particular case? And who is responsible for such a decision? For members of statutory bodies in particular, the key question is whether shareholders can accept responsibility for such decisions instead of the statutory body or whether the responsibility is left to them.

The Supreme Court addressed these questions in one of its recent decisions. The case concerned a public limited company, but the Supreme Court's conclusions are general and can be applied to any other capital company.

There is no doubt that shareholders can call upon the statutory body and try to persuade its members to take a particular decision. However, it is equally indisputable that in such a case the final decision rests on the shoulders of the statutory body and the responsibility for that decision rests with the statutory body as well.

According to the Supreme Court, it is permissible for shareholders to assume the responsibility for certain decisions of the statutory body if they actually want the statutory body to make such decisions. However, this can only be done if the matter in question is not a matter of the company’s business management, i.e., ordinary business matters.

Therefore, if the statutory body makes a decision based on the initiative of shareholders that relates to ordinary business activities, this does not relieve the statutory body of its responsibility for the compliance with its duty to act with due care and it does not give rise to any liability for shareholders.

However, if it is a decision that relates to, for example, the long-term objectives of the company and its strategic management, then such a decision may be outside the boundaries of business management. If, for example, the articles of association delegate responsibility for such matters to the statutory body, then it may be permissible for shareholders to take responsibility for decisions related to such matters.