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In today’s article we would like to focus in details on the most important changes affecting VAT regime in Czech Republic.
As the EU VAT Directive regulating vouchers was adopted in June 2018 all Member States must seek to introduce provisions aiming to adhere to it by the end of the year. Consequently from 1st January 2019 the necessary arrangements are implemented into the Czech VAT Act.
In accordance with the Directive the voucher should be understood as “an instrument containing in itself an obligation to accept the voucher as partial or full consideration for the delivery of goods or the provision of services“. The definition however, as further explained in the Directive, distinguishes between the single-purpose and multi-purpose vouchers and the resulting different taxation between these two types.
If the place of supply and the amount of the VAT due is known in advance the voucher should be viewed as single-purpose. Therefore such voucher is considered as regular supply of goods or services.
Inversely multi-purpose voucher is defined as one which enables holder to access numerous services ie. shopping malls. In such cases the amount and VAT is not known upfront. Consequently the day of the taxable supply is when the respective goods are sold or the service is provided.
Necessary effort to deliver a tax document
According to the new wording of the Czech VAT Act additional duty arises for all taxpayers when issuing the tax document. The tax payer has to prove that he or she made a “necessary effort to deliver a tax document” in the standard time envisioned for the delivery of such documentation-15 days. The burden has shifted significantly towards the taxpayer and his/her (in)ability to provide authorities with the file but also to prove that he or she has satisfied the “necessary effort” test.
Deduction of VAT adjusting 200 000 CZK limit
Another change coming into effect from 2019 is linked with the deduction of VAT. When the total amount (excluding VAT) of the repairs on the real estate owned by the taxpayer exceeds the amount of 200 000 CZK the taxpayer has to adjust the deduction of the VAT in cases when the real estate is sold within the 10 years period for the adjusting of the VAT deduction.
Other changes in the VAT Act are going to be described in the next article.
Contact us if your company requires VAT assistance in Czech Republic.