Jurisprudence of the Supreme Administrative Court

In the SAC’s decision in case 4 Afs 121/2024-31, the court addressed the issue of the taxability of land and the intention to construct a building on the land firmly connected to the ground, according to the wording of the VAT Act effective in 2016. According to the SAC, there was no intention of the contracting parties to supply or acquire this land for the purposes of development, and therefore the definition of building land from the point of view of the VAT Act was not met. It was not decisive that it was a plot of land that the zoning plan allowed for development. This is an important interpretation that may have an impact on the approach used in practice.

Judgements of the CJEU

• In Case C-232/24 Kosmiro, the Court of Justice of the EU considered the issue of taxability of two forms of factoring services provided by Kosmiro. Specifically, it was ordinary factoring (purchase of receivables before maturity) and also collateral-based financing (a loan secured by a receivable), for which Kosmiro received a flat-rate establishment fee and a financing fee. According to the CJEU, both forms of factoring services are subject to VAT, each of the two forms is a single indivisible supply – taxable debt collection. Should the local VAT law require the exemption of these services, they may be taxed on the basis of the direct effect of the directive. This decision could have a significant impact on Czech practice.
• Furthermore, a decision was issued in case C744/23 Zlakov, in which the CJEU assessed the taxability of a legal service that was provided free of charge with a certain chance of remuneration (depending on the success of the lawyer in the dispute). It follows from the Court’s view that there is a provision of services for consideration and that uncertainty as to the outcome of the proceedings is irrelevant. It is also not decisive which of the parties to the dispute will ultimately pay the lawyer’s fee.
• In Case C-234/24 Brose, the Court was concerned with the taxability of successive sales of a production mould located in Bulgaria for which the products exempt-supplied to another Member State are produced. The mould remained in Bulgaria throughout the year and, in the course of production, was first sold to a German company, which then sold it to a Slovak customer who applied for a refund of Bulgarian VAT. The local tax administrator rejected the request for a VAT refund because, in his opinion, VAT should not have been charged. According to the CJEU, the supply of mold cannot be exempted as a separate intra-community supply. According to the CJEU, it is probably not even an ancillary supply to the exempt sale of products, but this must be assessed by the national court. The CJEU has indicated certain clues under what conditions it could be a separate performance. The court’s decision may shape practice in the Czech Republic to a certain extent.
• In Case C-639/24 FLO VENEER, the Court ruled on evidence relating to the performance of transport in the case of an intra-Community supply of goods. The selling company proved that the transport had taken place. However, it did not have exactly the evidence of transport listed in Article 45a of Regulation 282/2011, so the tax administrator refused to exempt these intra-community goods. According to the CJEU, the impossibility of obtaining evidence under Article 45a of Regulation 282/2011 cannot in itself lead to taxation if the transport can be proved by other means. We believe that the case should not have a significant impact on practice in the Czech Republic.
• The possibility for Member States to limit the right to deduct for representation expenses was discussed by the Advocate General in his Opinion in Case C515/24 Randstad. This is an opinion that addresses the specific situation of Spain and explains the possibility of avoiding the right to deduct VAT on representation expenses. In our opinion, the given opinion does not affect the rules for the right to deduct VAT for representation expenses in the Czech Republic.