The adopted amendment of the VAT Act enables EU bodies to retroactively purchase goods used to combat the COVID-19 pandemic without VAT. The European Court of Justice ruled on the utilisation of a reduced VAT rate for elevator renovations in apartment buildings, defined multipurpose vouchers and addressed the issue of exempting education in the EU member states and the rules for taxing intra-Community acquisition of goods.
Exempted supply of goods
In April, an amendment to the VAT Act was approved. It enables EU bodies to purchase goods exempted from VAT as long as the goods are used to combat the COVID-19 pandemic. The effectiveness of this amendment was set retroactively to 1 January 2021. As a result, the taxation of goods deliveries in 2021 may be subject to adjustments – the amendment describes how to carry out such adjustments.
Judgements of the CJEU
- Elevator renovations in residential buildings
In the ruling on the case C-218/21 DSR – Montagem, the European Court of Justice faced the issue of VAT rate for repairs and renovations of elevators in residential buildings. In its analysis, the court significantly upset the traditional view of this area. The ruling shows that the reduced tax rate must not be applied in cases of renovation of equipment in apartment buildings that are partially used for other than residential purposes. It even completely excluded the application of a reduced tax rate for regular maintenance of such equipment. The question remains how the relevant provisions of the Czech VAT Act will be interpreted after this decision.
In the ruling C-637/20 DSAB Destination Stockholm, the European Court of Justice addressed the definition of vouchers in terms of the value-added tax. In principle, it upheld the most widespread interpretation of the definition of multipurpose vouchers. Therefore, the ruling should not lead to any significant changes in the approach of taxable entities to taxing the sale of vouchers.
In its ruling C-612/20 Happy Education SRL, the European Court of Justice confirmed that member states have extensive jurisdiction when it comes to determining which types/forms of education should be exempt from tax. This ruling also should not significantly affect the practice in the Czech Republic.
- VAT for intra-Community acquisition of goods
The opinion of the Advocate General in the case C‑696/20 B Dyrektor Izby Skarbowej describes the rules for taxing intra-Community acquisition of goods in cases where the buyer provided VAT ID issued by a country from which the goods were shipped. It concludes that it may not always be necessary to apply an acquisition tax by the buyer. The opinion of the Advocate General may have a direct impact on situations that occurred before 1 September 2020, i.e. before the implementation of the “quick fixes”. However, we also noticed overlaps with the current VAT legislation in his analysis.