Tax 

VAT News [April 2022]

The Coordination Committee of the Czech Chamber of Tax Advisors and the General Financial Directorate drew conclusions on distraints and deductions from salaries, leaseback issues and services provided by municipalities to collective waste system operators. The finance minister decided on the VAT waiver for certain transporters. And the April news naturally contains interesting judgements made by the Court of Justice of the European Union (CJEU).

Distraints and deductions from salaries

Employers making deductions from employee salaries on the basis of distraint orders are entitled to the reimbursement of the incurred costs (lump sum). The Coordination Committee of the Czech Chamber of Tax Advisors and the General Financial Directorate made a conclusion that the relevant financial reimbursement is not subject to the value added tax. However, the General Financial Directorate originally stated an opposite approach but eventually stopped enforcing it.

Leasebacks

The Coordination Committee of the Czech Chamber of Tax Advisors and the General Financial Directorate described situations which do not involve the supply of goods from the VAT perspective in the case of leaseback. The discussants took into account the CJEU’s case law and drew a conclusion which will likely result in a change in the practice of leasing companies on a massive scale. Tax advisors will undoubtedly proceed in line with the Coordination Committee starting from 1 April 2022, while they should also use other approaches in leaseback contracts concluded before that date.

Municipalities and collective waste system operators

In the opinion of the Coordination Committee of the Czech Chamber of Tax Advisors and the General Financial Directorate, services provided by municipalities to collective waste system operators in relation to sub-supplies of waste collection should be subject to VAT. According to the final version of the paper, the tax administration even insists on such tax treatment being applied immediately rather than after the originally proposed transition period.

VAT waiver for certain transporters

By his decision published in the Financial Newsletter for June 2022, the finance minister waived sanctions on the current VAT arrears (subject to additional conditions) for selected transporters. Effectively, it is a possibility to pay the VAT with several months of delay without any increase by interest or other sanctions.

Judgements of the CJEU

  •  Allocation of employees and an establishment for VAT purposes

In case C-333/20 Berlin Chemie, the Court of Justice addressed the issues of an establishment for VAT purposes when a subsidiary allocates its own employees for the needs of its parent company. The Court of Justice embraced a stance that an establishment for VAT purposes does not arise. The question is whether it is possible to generalise the opinion of the Court of Justice as the necessary details are not included in the description of the situation.

  • Entitlement to tax deduction in respect of “investment in services”

The opinion of an advocate general in case C-98/21 Finanzamt R describes the rules for exercising an entitlement for deduction from purchased supplies for services provided free of charge that bring benefits to subsidiaries. In the opinion of the advocate general, the entitlement to deduction depends on what output supplies are generated by these subsidiaries. The opinion contains a number of rather surprising statements which, however, are probably a mere consequence of an imperfectly described factual situation.

CJEU Indirect Taxes VAT dReport newsletter

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