Decision on VAT remission

The minister of finance issued several decisions which extended the remission of VAT in the case of selected taxable supplies and expanded its application to other types of supplies. In the case of respirators, it is possible until 3 June 2021 to remit VAT not only on their delivery but also on their intracommunity acquisition or import. In the case of vaccines against COVID-19 and relevant testing kits, it is possible to remit VAT on their delivery, intracommunity acquisition or import until 31 December 2022.

E-commerce rules effective from 1 July 2021

The European Commission issued extensive explanatory notes, describing the technical details of the registration into one-stop-shop systems and VAT return forms. However, practical procedures for persons registered under a one-stop-shop in the Czech Republic will depend on the requirements of the Financial Administration of the Czech Republic.

We would like to point out that the respective amendment to the VAT Act, which should implement the rules effective from 1 July 2021, has not yet been approved even by the Chamber of Deputies. However, it is still possible for the implementation to be carried out in time.

Judgements of the CJEU

• Case C-48/20 UAB “P.” quite clearly describes the perspective on the business model of fuel cards. It can be inferred that the CJEU does not see fuel as goods delivered to the company that operates the fuel card system but as goods delivered directly to its customers. Therefore, the issued decision can have a significant impact on the business model of fuel cards applied in the Czech Republic.
• In case C‑507/20 FGSZ concerning the limitation period for tax adjustment of a definitively irrecoverable receivable, the CJEU concluded that it is not correct for the limitation period to start on the date of taxable supply (or the due date of the receivable). Yet it is these terms that the Czech VAT Act uses to limit the possibilities of a tax adjustment. The CJEU’s view could therefore cause a change to the Act or modify the existing practices.
• In case C-907/19 Q-GmbH, the CJEU commented on the extent of VAT exemption in the case of insurance activities. It concluded that the provision of an insurance product through a non-exclusive user licence cannot be exempted from VAT. We do not expect that Czech insurance companies would be surprised by this approach.
• In case C 895/19 A, the CJEU concluded that in the case of intracommunity acquisition of goods, it is not possible to separate output VAT from the right to deduct VAT. We believe that the impact of this decision on the Czech practice will be insignificant.