According to the decision of the Minister of Finance, the deliveries of respirators will continue to be exempt from VAT until the end of the year. The Minister has also decided to remit the duty to pay VAT on electricity and gas supply for the period from 1 October to 31 December 2021. The CJEU has decided that the condition of the Czech VAT Act requiring a bad debt to be incurred more than six months before a court decision on insolvency in order for the VAT paid to be adjusted (reduced) is in conflict with the European VAT Directive. For more details, take a look at the November VAT news.
VAT remission issued by the Minister of Finance
The Minister of Finance has extended the possibility (de facto the obligation) to supply respirators (mainly the FFP2 type) VAT-free until 31 December 2021. Furthermore, the Minister has also issued a decision on the remission of VAT on electricity and gas supply if the chargeable event occurs in the period from 1 October 2021 to 31 December 2021 (according to the decision, VAT also does not need to be paid on payments made before the date of the chargeable event if they are received in the same period).
Thus, the Minister of Finance has introduced a temporary zero VAT rate on the supply of these commodities.
In the case C-398/20 Elvospol, the CJEU considered the condition of the Czech VAT Act requiring a bad debt to be incurred more than six months before a court decision on insolvency in order for the VAT paid to be adjusted (reduced). According to the CJEU, this requirement is in conflict with the European VAT Directive. Although this “six-month test” was removed from the VAT Act years ago, the judgement also sheds light on other conditions the current VAT Act stipulates for the adjustment of tax on bad debts.
In the case C-281/20 Ferimet, the Court of Justice described the rules regarding the possibility of denying the right to deduct VAT when a fictitious supplier is mentioned on the invoice. According to the CJEU, if the supply has actually been carried out, it is necessary to identify the actual supplier and assess whether they acted as a taxable person during the supply. In general, this rule is already applied by the Czech courts.
The CJEU’s decision in the case C-373/19 Dubrovin & Tröger GbR – Aquatics concerns the application of VAT exemptions for swimming tuition and provides interesting comments on VAT exemptions related to tuition and training under the European VAT Directive. However, in our opinion, it should not have a significant impact on practice in the Czech Republic.
In the case C-324/20 X-Beteiligungsgesellschaft, the CJEU expressed its views on the rules for determining the VAT charge date when the consideration for a chargeable event is divided into multiple instalments. Unsurprisingly, the Court concluded that the VAT charge cannot be postponed if the consideration for the chargeable event is merely divided into individual instalments.
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