The Recovery Package in the context of tax changes
Following the Government announcement on the Recovery Package, the related amendment to the tax regulations was published. Below we summarise a selection of the most important changes in this area.
The amendment to the VAT Act is currently pending approval in the Senate. The EU Commission requires the Member States to regulate the application of VAT on payments by fuel cards. The Court of Justice of the EU has ruled on the question of determining the place of supply for services in the case of participation in a fraud. For more information, see the latest VAT news.
The amendment to the VAT Act, which increases the limit for VAT registration from the current CZK 1 million to CZK 2 million, has been referred to the Senate for further discussion. Compared to the original proposals, there should be no changes in the application of the VAT rate on fruit, vegetables, and sweetened beverages. The amendment contains transitional provisions allowing some taxpayers to deregister from VAT within five days of its announcement. This is expected around mid-December.
The EU Commission has invited Member States to adjust the application of VAT on the sale of fuel (and other goods). At present, the goods are invoiced by the petrol station operators to the “fuel card companies” and then invoiced by these companies to the car operators. The current practice of taxation at all links of the commercial chain does not correspond to the practices required by the CJEU.
In its ruling C-641/21 Climate Corporation Emissions Trading, the Court of Justice addressed the question of whether it is necessary or possible to determine the place of supply of services according to the place of residence of the supplier when, under normal circumstances, they would be taxed at the place of residence of the recipient. The Court ruled that reclassification of the place of supply was not possible.
According to the opinion of the Advocate General of the CJEU in Case C‑612/21 Gmina O, municipalities are not required to apply output VAT on the supply of ordinary commercial services if the supply of those services is in the public interest and the municipality is not able to generate any profit from the activity. This is a rather controversial view, and it is questionable whether the Court of Justice will endorse the Advocate General’s opinion.
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