VAT News [February 2020]

What changes in the VAT Act are in preparation? What are the greatest difficulties related to reducing the VAT rate on draught beer? How to look at benefit cards from the VAT perspective? These are just a few of the many topics you will read about in the latest VAT news.

Amendments of the VAT Act

In the context of the new rules for intra-Community trade in goods, the Czech Financial Administration published a new form of EC Sales List. However, the related amendment to the VAT Act has not been enacted yet.

The Chamber of Deputies has approved the extension of the deadline for returning excess VAT deduction from 30 to 45 days. The change is to be discussed in the Senate in the nearest future. The given amendment should also enable Tax Administrators to immediately return a part of excess VAT deduction that is not subject to further review.

In our opinion, the recently much discussed issue concerning the reduction of the VAT rate on draught beer, which should be applicable from 1 May 2020 (in certain cases), is often incorrectly interpreted in the media. The most controversial aspect of the issue is not the application of various VAT rates on draught beer but rather the uncertainty as to how to differentiate between individual situations.  Determining whether the provided services are part of catering or beer is provided in the form of goods, may be rather difficult. It will be possible to make certain conclusions only based on the rulings of the European Court of Justice.

Information of the General Financial Directorate on Brexit

 The General Financial Directorate informed that over the transition period until the end of 2020, the VAT application rules should not be subject to any changes. In this context, we would like to point out that there will be changes in the procedure of claiming the British VAT included in the price of purchases realised in 2020, which should in principle be refunded by the British Tax Administration. We would also like to point out that in the following years, the British tax may not be claimable at all.

Negotiations of the Coordination Committee of the Chamber of Tax Advisors of the Czech Republic and the General Financial Directorate – Benefit Cards

The Coordination Committee concluded that benefit cards (such as the Multisport Card) should be considered to be vouchers for VAT purposes. It is most likely that these cards should be issued by the relevant “benefit” companies without the burden of VAT, which is not often the case in the Czech Republic.

CJEU case law

In case C‑716/18 AJFP Caraş-Severin, the advocate general expressed his opinion on when the value of rent should be included in the turnover for the purpose of the payer’s VAT registration. It is likely that in certain cases (namely for one-off instances of renting a property), the opinion of the advocate general could modify the current trends in interpreting the issue in the Czech Republic.

Amendment to the VAT Act CJEU Indirect Taxes dReport newsletter