The Ministry of Finance has produced a draft decree providing the correct calculation of the floor area of properties. The Court of Justice of the European Union decided under what conditions VAT taxpayers could be removed from the registry for violations of regulations. The Advocate General of the CJEU also examined the taxation of payments invoiced due to transfer pricing according to the OECD guideline. You can read about these topics in our article.
Tax Administration activities
In connection with the VAT Act amendment effective from July 1, 2025, in the area of real estate, the Ministry of Finance has prepared a draft decree necessary for the correct calculation of floor area of properties. The decree defines terms such as room, space, and land and establishes the method for calculating the floor area of a building, part of a building, room, and space. This decree is currently undergoing external review procedures.
Judgements of the CJEU
- In the judgment C-213/24 Grzera, the Court of Justice assessed the status of taxpayers in the sale of land in Poland by spouses. Under local legislation, a property community arises by law upon marriage without legal personality. The Court ruled that the seller is a taxable person, even though the land was never used for economic activity by the spouses. Active business steps must be taken for the sale and means used that professional traders use. According to the Court, each spouse may be a taxable person separately, or under certain conditions, just their property community. We believe that this decision does not have a significant impact on common practice in the Czech Republic due to the specificity of the property community in Poland.
- In case C-164/24 Cityland, the Court of Justice evaluated the possibility of automatic deregistration from the Bulgarian registry in the event of VAT regulation violations by taxpayers. The Court ruled that member states can take measures to ensure the correct collection of tax and prevention of tax evasion. Therefore, in the Court’s opinion, deregistration is possible, but only for serious regulation violations by taxpayers, and the extent of violations must first be thoroughly investigated by the tax administrator. This judgment could potentially impact the practical application of the Czech VAT Act.
- In the opinion on case C-726/23 Arcomet Towercranes, the Advocate General of the EU Court of Justice assessed the taxation of payments invoiced due to transfer pricing according to the OECD guideline. Based on a transfer pricing study, the parent company concluded a service provision agreement with its subsidiary and annually issued an invoice to adjust profits. It was also possible for the subsidiary to issue an invoice for loss compensation in some years. The Advocate General decided that there are no general rules for the taxation of these payments, but that the remuneration for services calculated according to the transactional net margin method under the OECD should be considered as compensation for the provision of services and thus be subject to VAT. According to the Advocate General, possible retrospective invoicing by the subsidiary can’t dispute this conclusion. However, whether the services were actually provided must be determined by the national court in the opinion of the Advocate General.
