The Czech Republic – changes to VAT

The following changes with proposed effectiveness from 1st April, 2017.

• The obligation to declare VAT in the case of a received advance payment will arise only in case that the related supply will be sufficiently specified, i.e. the particular goods or services, the applicable VAT rate and the place of supply are known. This amendment is of a key importance, for example in case of VAT regime by vouchers and coupons.
• Taxable supplies provided over a period longer than twelve months, should be regarded as effected no later than on the last day of each calendar year, following the calendar year in which the provision of supplies commenced.
• The obligation to adjust (cancel) VAT deduction originally claimed on input will be introduced with respect to unsupported shortages, destruction, loss or theft of asset items. The adjustment shall be made within the period in which the tax payer discovered such circumstances or could discover them.
• The amendment introduces an extension of application of local reverse-charge mechanism (e.g. in case of provision of personnel for construction and assembly work).
• The amendment introduces a new VAT status of so called ‘unreliable person’ that could be applicable e.g. before the VAT registration of the respective person.
• VAT rate on newspapers and books will be reduced from 15% to 10%.
• The Constitutional Court made two changes regarding VAT control statement legislation. The changes concern delivery of requests from Financial Authorities to the VAT payers and the way of defining their requirements. The general existence of VAT control statement was confirmed by the Constitutional Court.