Activities of the tax administration

From 1 January 2026, the changes resulting from the amendment to the VAT Act, which brings the abolition of VAT exemption for the procurement of direct debits, keeping records of investment instruments and the collection of radio and television fees, will come into force. The amendment introduced rules for the digitalisation of the VAT refund system for the sale of goods to tourists from third countries exported in personal luggage. Other innovations also include the possibility of a direct refund of incorrectly charged VAT by the tax administrator, VAT refund to persons established outside the EU when acquiring or importing goods into the Czech Republic, or the introduction of a special form for claiming a VAT refund, including mandatory annexes.

The GFD has issued a long-awaited and very extensive information and annex regarding the application of VAT in the area of real estate from 1 July 2025. This information contains a description of the application of the VAT rules in force from 1 July 2025 and provides a corrective interpretation in many areas that would hardly be inferred from the text of the Act alone. These include, for example, the issue of land in a functional unit with a building, the definition of building land, the interpretation of the term “substantial change”, the construction law determination of the definition of “residential space” and the determination of the VAT rate in the situation of the conversion of a part of a family house into non-residential premises.

Furthermore, at the turn of the year, information from the GFD was published focused only on changes in the exercise of the right to deduct VAT on the basis of an earlier amendment to the VAT Act effective from 1 January 2025. The information generally refers to the conditions for exercising the right to deduct VAT within the framework of supplies carried out under the regime for small enterprises, about the limitation of the right to deduct VAT when purchasing a selected passenger car, shortening the deadline for exercising the right to deduct VAT, exercising the right to deduct VAT in a partial amount and when registering the payer.

Within the Coordination Committee between the GFD and the Chamber of Tax Advisors of the Czech Republic, a contribution dealing with the exercise of the right to deduct VAT in the previous period by means of an additional tax return after receipt of the tax document was discussed and concluded. With regard to this contribution, the GFD stated that the right to deduct tax cannot be exercised in the supplementary tax return for the tax period in which the obligation to declare the tax arose on the part of the supplier of the supply, if the recipient did not hold a tax document in this period. According to the GFD, this procedure cannot be justified by a reduction in administrative burden under Section 104 of the VAT Act. Situations where the taxpayer is entitled to deduct VAT in part are not subject to the contribution. The next Coordination Committee will deal with new contributions concerning the application of VAT to activities under the planning agreement and the application of the reverse charge regime on the basis of Section 92a(1) of the Tax Act. 6 of the VAT Act. The discussion of these contributions should take place at the end of February 2026.

Judgements of the CJEU

• In Case T-657/24 Versãofast, the Court of Justice assessed VAT as a scheme for the activity of a credit intermediary which provided prospective customer acquisition services. The Court has held that, where the essence of the intermediary’s services is to take everything necessary for a credit institution to conclude credit agreements with potential customers, that service is exempt from VAT. If this is not the essence and the services are of a technical or administrative nature or basically only the provision of information about a financial product, this service is taxable. The method of remuneration of the intermediary may indicate the essence of the services. The application of the exemption is not affected by the fact that the intermediary does not have a mandate to act on behalf of the credit institution, that the terms of the credit agreements are given and unchangeable, and that customers (or the credit institution) have the option not to conclude the credit agreement. In our opinion, this verdict does not have significant implications in practice.
• The conditions for the application of the facilitation of triangular trade were dealt with by the Court in Decision T-646/24 MS KLJUČAROVCI, where it held that, in the context of two successive supplies of goods between A-B-C with the applicable rules of triangulation, there may be an instruction that the goods be transported directly to customer D on the instructions of entity C. It does not matter that D did not take over the goods from C and that B was aware that  However, if it is proven that there was fraud and the knowledge test was met, the triangular trade regime cannot be applied. This conclusion may have implications for the approach used in practice.
• In Case C-121/24 Vaniz, the Court  of Justice also ruled on a question concerning liability for VAT not paid by a supplier who had been removed from the commercial register. In Bulgaria, there is a special legislation that gives the tax administrator the possibility to enforce payment of the tax debt from third parties in the event of the deletion of a legal entity. The Court of Justice has held that a guarantee may arise if the customer knew or should have known that the VAT would not be paid, and the debtor’s extinction does not mean that the tax authorities could not recover the debt from the guarantor. However, the obligation to guarantee must be obvious to the customer from the national legislation, and Bulgarian legislation meets this. Given the specific nature of this national regulation, it can be concluded that the decision does not have a major impact on common practice in the Czech Republic.
• In Decision C-796/23, Česká síť s.r.o. The Court assessed the designation of a taxable person within a company (association without legal personality) under the Czech VAT Act effective before 1 July 2019. Internet connection services were provided, where each of the members of the alleged association provided the service in its own name to its portfolio of customers, but the tax administrator considered Česká síť to be a designated participant in the association and assessed additional VAT for the entire association. The Court held that, in order to determine the taxable person, it was necessary to examine who carried out the economic activity independently. If the branches provided services independently of the association (i.e. in their own name, on their own account, on their own responsibility and bear the risk for the performance of their activities), the individual branches will be considered a taxable person, not Česká síta as a designated participant in the association. It is irrelevant to this conclusion whether the conduct of the branches complied with the national rules on associations. However, if it were a business model abusive of law, then all the entities concerned could be considered as a single taxable person. Given that the decision reflects the previous legislation, its impact on current practice is limited.
• The Advocate General of the Court of Justice of the EU in case T643/24 Credidam commented on the taxability of the fee for unauthorized use of musical works, while Romanian law stipulates that in the event of non-granting of a license, the reproduction of works to the public by the rightholder must be tolerated and in return the user is obliged to pay a fee three times the price list. The Advocate General concluded that it was a supply of services in the context of a legal relationship established by the relevant legislation. The service is provided for remuneration in the form of a surcharge that is ‘sufficiently directly linked to the provision of the service’. The mark-up results from the statutory method of calculating the remuneration and reflects the higher costs of the collective management organisation associated with ensuring compliance with the licensing obligations of users. However, the Advocate General draws attention to a number of doubts, as the case-law in this area is inconsistent.
• In his Opinion in Case C-565/24 P-GmbH, the Advocate General considered the application of the special travel arrangements to package holidays connected with promotional events, but the price of the tour did not even cover the cost of those packages, and sometimes the tours were even free of charge. The Advocate General took the view that the concept of ‘transactions carried out by travel agents’ must be interpreted as not affecting P-GmbH’s business model, in particular because there would be a double tax burden by not recognising the right to deduct input tax with the taxation of all output transactions.