VAT News [January 2020]
The amendment to the VAT Act is still in the legislative process; thus, the new rules called “Quick Fixes” have not yet come into effect, and this despite the EU requirements effective from 1 January 2020. The new rules will not come into effect before April 2020. The implementation of the general reverse-charge system in the Czech Republic for the supply of goods exceeding the limit of EUR 17,500 is getting delayed too. Find out what is new regarding VAT.
The Amendment to the VAT Act
As we have already informed you, the Czech Republic was obliged to introduce new measures in the area of VAT, jointly referred to as „quick fixes“, on 1 January 2020. The measures were intended to have a significant impact on applying the tax exemption with respect to the supply of goods to another EU member state, to change the established allocation of transportation during intracommunity supplies of goods in chain transactions as well as to harmonise the procedure of taxing the sales of goods via a consignment warehouse with the so-called call-off stock simplification. However, because the VAT amendment is still in the legislative process, it is unlikely for it to be in effect before April 2020. Until then, VAT payers have the opportunity to proceed in accordance with the current wording of the VAT Act, or to utilise the direct effect of the EU Directive and proceed according to the new rules.
Materials of the European Commission regarding the “Quick Fixes” rules
The effort of the European Commission (EC) to elucidate some provisions of the new “Quick Fixes” rules and to bring them in line with the practical possibilities of payers is apparent in the material published by the European Commission on its website at the end of last year. Unfortunately, this is largely at the expense of legal certainty – certain ideas stated by the EC are in contrast with what the legislation actually says. Uncertainty arises from issues such as the moment of the tax ID handover during the intracommunity supply of goods, the possibility of correcting mistakes in the EC sale list, or in the case of applying the call-of stock simplification.
General Reverse-Charge system in the Czech Republic
The implementation of the general reverse-charge system for the supply of goods exceeding the limit of EUR 17,500, for which the Czech Republic received a temporary authorisation by the Council, is getting delayed. According to the statements made by the Ministry of Finance, it is at first necessary to prepare and pass another amendment to the VAT Act as well as to negotiate the time extension of the temporary authorisation with the other EU-members. The implementation of the new reverse-charge system in the near future is thus highly unlikely. We will follow further development in this matter attentively.
Opinion of the General Financial Directorate Regarding Fuel Cards
The General Financial Directorate seeks to change the current approach to applying VAT to fuel purchases at petrol stations, so it is in line with the practice of the CJEU. Although the exact date of the change is not yet known, the subjects providing their clients with fuel cards could be, according to the VAT and as soon as 2020, regarded as suppliers of services and not as fuel suppliers. Discussions are currently being held regarding which business models of such subjects are still supposed to follow the rules for the supply of goods, and for which of them this change is truly necessary.
Debates of the Coordination Committee between the Czech Chamber of Tax Advisors and the General Financial Directorate Regarding Benefits Cards
Debates are supposed to take place within the Coordination Committee between the Czech Chamber of Tax Advisors and the General Financial Directorate about benefits cards (such as Multisport Cards) and whether they should be perceived as vouchers for the VAT purposes, on which special tax rules according to the VAT Act are to be applied. The proposer suggests they be regarded as vouchers; in practice, that would mostly be the case of multi-purpose vouchers.
CJEU case law
In case C-707/18 Amarasti, the Court of Justice of the European Union (‘CJEU’) provided its comments on the matter whether the consignment fiction is supposed to be applied for VAT purposes. According to the Court, the fiction according to the purchase consignee structure is supposed to be employed even when the legal obligation of the payer is arranged by another person (supplier) in their own name, at no cost and on the basis of a contractual agreement, and when this supplier hires a subcontractor for partial operations. Thus, the payer does not accept a single ordered service but as many services as the supplier acquired from their subcontractors. This affects the determination of the date of taxable supply and the tax base of the supply, which are declared by the supplier. This case law represents a very surprising precedent.