2025 VAT Act Amendment

The Government of the Czech Republic has submitted for discussion to the Chamber of Deputies an amendment to the VAT Act. We have already informed you about its preparation several times in this year’s VAT News. The amendment introduces changes in claiming VAT deductions, treatment of outstanding liabilities, taxation of real estate transfers, corrections of the tax base, determination of the tax base for the sale of selected goods to employees and many other key areas. The proposed changes are scheduled to become effective gradually between 2025 and 2027.

Judgements of the CJEU

• In case C-533/22 Adient, the CJEU considered the question of the creation of a so-called “VAT-receiving establishment” where a subsidiary provides complex processing and logistics services to its own parent company. The Court of Justice concluded that no receiving establishment is created in such a case. In fact, its reasoning gives minimal scope for the creation of receiving establishments in general, making it one of the most important decisions of the last few months.
• In the opinion in case C-243/23 Drebers, the Advocate General of the CJEU distinguishes between the rules for determining the time limit for adjusting the deduction for the acquisition of immovable property and the same rules for renovation work on immovable property. The Advocate General concludes that, in the case of renovation work, the period for adjusting the tax deduction cannot exceed five years. Such a view, if accepted by the CJEU, could significantly affect the form of the Czech VAT Act.
• In case C-248/23 Novo Nordisk, the Advocate General of the CJEU acknowledged that so-called compensation payments paid by pharmaceutical manufacturers to health insurers might not be subject to value added tax rules if they are clearly formulated as fiscal matters. This view is unlikely to have the capacity to change the approach to the VAT treatment of such payments in the Czech Republic.