VAT news [February 2023]

The amendment to the VAT Act, which will bring, among other things, a set of new obligations for financial institutions making cross-border payments, has been delivered to the Chamber of Deputies. Since January, a government decree has been applied, which establishes the obligation to provide energy price subsidies to energy producers or distributors. The CJEU issued a judgment in a case concerning the taxation of prizes in competitions. See the article for details.

At the beginning of February, an amendment to the VAT Act was delivered to the Chamber of Deputies for discussion, which should be effective from 2024. The current text of the amendment contains only one area related to the application of VAT, namely the procedures for determining the tax point at auctions. The essential part of the amendment consists of a set of new obligations concerning financial institutions making cross-border payments. In certain circumstances, the institutions concerned will have to report these payments (completely irrespective of whether they are subject to VAT).

Already for January 2023, Government Regulation No. 5/2023 Coll. is applied, stipulating the obligation to provide energy price subsidies to energy producers or distributors. The regulation could have a relatively broad impact, as it affects the tax base on energy supplies and thus indirectly affects their customers.

Judgements of the CJEU

  • The CJEU’s decision in Case C-713/21 X, concerning the taxation of prizes in competitions, complements the Court’s previous case law on the effects of the element of chance in winning a prize. The Court’s current opinion has left the previous ambiguities in this area somewhat open, but it is clear that the role of chance is not always crucial in assessing whether VAT is due on a prize.
  • At the end of January, the opinion of the Advocate General of the CJEU in Case C-677/21 Fluvius Antwerpen was published, in which he discusses the issue of taxation of unauthorised energy consumption. The Advocate General concludes, through several partial considerations, that taxation is indeed necessary if the person concerned is entitled to financial compensation for the unlawful energy consumption. While one can probably agree with the conclusion, some of the Advocate General’s thoughts raise additional questions. For example, whether any compensation paid to a VAT-registered business from which goods are stolen should be subject to VAT.
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