New Definition of PPP Projects and VAT Impacts

The upcoming amendment to the VAT Act concerning PPP projects in transport constructions represents a significant change in the area of VAT collection. The proposed legislative adjustment stipulates that for transport constructions, VAT will be collected based on the services provided at the moment when the affected transport construction is put into operation. This approach is chosen to simplify the financing process of transport constructions and increase the transparency of PPP projects.

Tax Administration Activities

Based on the amendment to the VAT Act effective from January 1, 2025, the General Financial Directorate (GFŘ) released information focused solely on changes regarding the emergence of tax liability and the registration process from the perspective of VAT. The information generally discusses monitoring turnover, deadlines for submitting registration applications, the emergence of tax liability, and other registration processes. This information also includes a published appendix to the VAT registration application, which includes detailed questions regarding the economic activity of the tax subject, aiming to expedite the registration process.

Judgements of the CJEU

• In opinion C-427/23 Határ Diszkont Kft., the Advocate General of the Court of Justice of the EU expressed views on the VAT refund on the export of goods to individuals from third countries and charging a fee for processing the VAT refund. In this opinion, he concluded that the supply of goods to non-residents in the EU is exempt from VAT due to export and that fees for processing the VAT refund are not considered exempt supplies as financial activities or services related to export. Such an opinion – if adopted by the EU Court of Justice – could influence the interpretation and application of rules concerning services related to exports and VAT refunds in the EU.
• The Advocate General of the Court of Justice of the EU in case C-615/23 P.S.A. assessed the VAT regime on a subsidy provided by the municipality to a private carrier to cover losses from operating public transport. The fare was determined by the municipality. The Advocate General concluded that VAT should not be collected from the subsidy, as the subsidy is neither a payment for a service provided to the municipality nor a consideration from a third party included in the tax base of the transport service provided to passengers. If the thoughts of this opinion are adopted by the CJEU, it may shape the interpretation of current rules.