VAT news [October 2023]

What is new in the amendment to the VAT Act approved by the Chamber of Deputies? How did the Court of Justice of the European Union rule on the question of whether or not a gift of higher value received by subscribers to a magazine in return for the payment of their subscription should be taxed? Will the opinion of the Advocate General of the CJEU on the functioning of the system of VAT refunds on unpaid claims have an impact on Czech legislation?

Government Consolidation Package and VAT

The Chamber of Deputies approved an amendment to the VAT Act in a wording that corresponds to the idea of the Ministry of Finance to abolish two reduced VAT rates and introduce a single reduced rate of 12%, as a number of opposition amendments were not adopted. In addition to the changes in rates, the amendment includes a ban on the application of VAT deductions for the purchase of M1 passenger cars (with the exception, for example, of ambulances and cars used for concessionary passenger transport).

Judgements of the CJEU

  • In Decision C-505/22 Deco Proteste – Editores, the CJEU addressed the question of whether it is necessary to tax a gift that comes with a subscription to a magazine. The gift was intended for customers who had paid at least one year’s subscription. The goods given away were either a tablet or a mobile phone and were therefore gifts of relatively high value. The CJEU held that the gifts were ancillary to the subscription provided and therefore VAT was not required on their value. The decision of the Court could, to a certain extent, affect the practice in the Czech Republic.
  • In case C-314/22 Consortium Remi Group, the Advocate General of the CJEU commented on the rules for correcting the tax base in the case of bad debts. The Advocate General’s view of the functioning of the VAT refund on unpaid receivables is largely at odds with the way the rules are described in the Czech VAT Act. If the Advocate General’s ideas are eventually adopted by the CJEU, this could be a groundbreaking case law.
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