VAT Act amendment from 1 January 2025

The Ministry of Finance is gradually dealing with comments on the draft amendment to the VAT Act, which should be effective from 1 January 2025, and is preparing the final version of the draft. It could be submitted to the government in April. It is already clear that the Ministry of Finance will not continue to envisage some changes in the area of VAT corrections for bad debts and will completely abandon the extension of the reverse charge regime to cleaning services.

Judgements of the CJEU

• Case C-606/22 Dyrektor Izby Administracji Skarbowej w Bydgoszczy describes the rules for correcting VAT if the taxpayer has applied a higher tax than should have been applied according to the law. The Court of Justice has further clarified the role of unjust enrichment which could arise as a result of the taxpayer receiving a higher VAT payment from the customer in the price of the supply and, subsequently, a refund from the tax authority. According to the CJEU, the tax authority could refuse or at least limit the amount of the refund when unjustified enrichment arises. We assume that the case should not have a major impact on the practice in the Czech Republic.
• In case C-576/23 Elite Games, the CJEU considered whether the reduced tax rate which the VAT Directive allows to be applied to admissions to amusement parks is also applicable to admissions to children’s playrooms in shopping centres. The CJEU concluded that, in view of the relatively narrow definition of “amusement parks”, the reduced tax rate could not be applied to admissions to children’s gaming facilities. The CJEU’s ruling could bring changes for businesses operating children’s gaming facilities in the Czech Republic.
• In case C‑122/23 Legafact, the CJEU addressed the issue of late filing of a VAT registration application after exceeding the turnover threshold for registration. It held that late filing could lead to a retroactive loss of non-taxpayer status. However, the national rules in question were rather specific and, in our opinion, it is difficult to transfer the conclusions of the given ruling to the Czech legislation.