Tax 

VAT news [August 2019]

What is new in terms of VAT? During July, the Senate rejected an amendment to the Act on Electronic Sales Records. The presented motion to amend will thus be returned to the Chamber of Deputies. The General Financial Directorate issued Information concerning new rules for the issuance and distribution of vouchers. Plus two new judgments issued by the Court of Justice of the European Union.

Amendment to the VAT Act

During July, the Senate rejected an amendment to the Act on Electronic Sales Records. Consequently, the presented motion to amend will be returned to the Chamber of Deputies for another vote. The amendment also proposes a decrease in VAT rates for selected supplies (draught beer, restaurant services, electronic books, household cleaning services etc.). The proposed changes have a postponed effect on the first day of the seventh calendar month following the date of publication in the Collection of Laws (the amendment is thus anticipated to take effect no earlier than in the first half of 2020).

Information of the General Financial Directorate

After several months of preparation, the General Financial Directorate (GFD) has issued Information concerning new rules for the issuance and distribution of vouchers. Aside from a description of one-purpose/multi-purpose vouchers as such, the Information also specifies the rules for voucher distribution, explains the arrangement for gratuitous voucher issuance, describes the impacts of subsequent complaints about goods (services), defines situations when a voucher has not been used at all and draws attention to situations when a supply is paid by a voucher with a nominal value higher than the cost of supply.

The GFD has issued Information that is significant primarily for taxable entities not based in the Czech Republic. The Information provides a summary of the rules for registering these entities to VAT and other selected tax liabilities.

CJEU’s judgments

As part of case C-242/18 UniCredit Leasing, the Court of Justice of the European Union (CJEU) provided its opinion on the rules for the VAT treatment of damages in the event of a premature termination of lease agreements. The compensation of unrealised revenues that would have been generated by the lessor if the lease agreement had not been terminated prematurely is, according to the CJEU, a component of the tax base of the lease and is thus subject to VAT. This conclusion is likely to affect the practice of lease companies operating in the Czech Republic. Concurrently, the CJEU further explained the application of the rules for a VAT decrease in the event of bad debt, which are part of the VAT directive.

Judgment C-388/18 “B” terminated disputes as to whether, in the event of sales that are subject to a specific VAT margin scheme, the turnover for mandatory VAT registration is calculated based on aggregate revenues generated by these sales or only from a sum of margin values. The CJEU opines that it is necessary to add up the aggregate revenues from individual sales and after the threshold value for VAT registration has been exceeded, it is necessary for the seller to become a VAT payer.

The article is part of dReport – August 2019, Tax news; Grants and investment Incentives.

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