Without being in the Eurozone, the Czech Republic will allow Payment of Taxes in Euros

World » EU | June 10, 2022, Friday // 17:10
Bulgaria: Without being in the Eurozone, the Czech Republic will allow Payment of Taxes in Euros

The Czech Republic wants to allow companies to pay taxes in euros, although it does not use the single European currency as its official currency. This was announced by Finance Minister Zbynek Stanjura in an interview with Reuters.

The government plans to introduce the measure in 2024 to increase its ability to borrow euros on international markets to cover the country's debts in euros.

Stanjura expects 10 to 30 percent of Czech companies to pay VAT and corporate income tax in euros instead of koruna.

The Czech Republic, one of the eight EU members outside the single currency area, has not specified a date for accession. But the move will pull the export-dependent economy forward to euroization, according to Reuters.

"At the moment we are proposing this, I believe we will resolve a major conflict in the business community, where a smaller number of exporters will welcome it and want it for a long time, and the rest will not," Stanjura said.

The Minister of Finance is not committed to the amount of revenue that the budget would receive in the pan-European currency, as "we cannot automatically assume that every exporter ... will choose to do so".

In 2021, Czech businesses paid 129 billion koruna ($5.53 billion) in corporate tax and 299 billion koruna in VAT to the budget.

Stanjura said no other steps towards joining the euro are planned, as the five-party ruling coalition has different approaches to adopting the single European currency.

"We are starting a debate on when we will assess higher government revenues in euros, how they will affect the financing of government debt," said the finance minister.

The government repaid its last outstanding Eurobonds last month and now has only 1.5 billion euros in outstanding debt in euros issued under local law.

Of the eight European countries that do not use the euro as their national currency, only Bulgaria and Croatia have stated immediate intentions to adopt it and have been admitted to the "eurozone waiting room" - the ERM II exchange mechanism, which is a mandatory step in assessing their national currencies.

The European Commission said earlier this month that Croatia is ready to adopt the euro on January 1st 2023, while Bulgaria is still not eligible to join, as it said, by 2024. The main problems are related to high inflation and unfinished legislative changes in the Law on the Bulgarian National Bank, which would guarantee the independence of the banking system from political interference and prepare the central treasury for its work in the euro area.

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