VAT News [September 2019]

What news is brought by the amendment to the VAT Act that will come into force in the spring of next year? Have you remembered to mark the important dates in your calendar to claim VAT refunds from other EU countries on time or to inform the tax authorities about the creation of a VAT group or changes in an existing group? And what is new at the Court of Justice of the EU? Read our VAT news and learn everything important.

Significant deadlines

Please note that applications for VAT refunds from other member states must be filed by no later than 30 September 2019, otherwise the refund claim will cease to exist.

Companies that are interested in creating a VAT group (or increasing/decreasing the number of VAT group members) should file the relevant application with the tax administrator by no later than 31 October 2019 to ensure that the planned steps may be taken as of 1 January 2020. Another opportunity for creating/revisiting VAT groups will come up again in a year’s time.

VAT Act Amendment – tax rates

The VAT Act amendment approved last week decreases the VAT rate from 1 April 2020 or 1 May 2020 (depending on its promulgation in the Collection of Laws) to 10% for catering services including serving draught beer, supply of e-books and audiobooks, water and sewer charges, hairdressing and barber services, repairs of bicycles, footwear, adjustments and repairs of clothing and textile products.

VAT Act Amendment – intracommunity trade with goods

A draft amendment to the VAT Act was presented to the Chamber of Deputies for the first reading and should significantly alter the conditions of cross-border trading with goods within the EU. Starting from January 2020, we should encounter, among other things, new conditions for the exemption of intracommunity supplies of goods, new rules for simplifying deliveries via a consignment warehouse and new procedures during the allocation of transportation in chain supplies of goods.

Substantive law conditions for the possibility of applying the exemption on intracommunity supplies of goods will newly include specifically the handover of the tax ID by the customer and the inclusion of intracommunity supplies in the EC sales list. The amendment will bring less scope for decisions about the allocation of transportation in chain supplies of goods and it will set a list of documents proving the actual performance of this transportation, which should be accepted by the tax authorities as a sufficient means of evidence. The functioning of the call-off stock simplification in the Czech Republic will be completely different from what businesses are currently used to, for example, VAT will not be self-assessed as of the time of relocation of goods to the consignment warehouse.

It is necessary to focus on the new rules as soon as possible and identify the impacts on your business, since the changes are relatively extensive. You will need to find adequate solutions for obtaining, verifying, circulating and archiving the newly required information so that your company is able to trade goods within the EU in 2020 without major burdens caused by the application of VAT.

CJEU case law

In case C-71/18 KPC Herning, the Court of Justice of the European Union (‘CJEU’) provided its comments on the sale of land with a property in a situation where the buyer intends to demolish the property and build another building on the land. In the view of the CJEU, this is not a transfer of construction land, which runs counter to the opinion that has long been presented by the General Financial Directorate.

The article is part of dReport – September 2019, Tax news; Grants and investment Incentives.

VAT Act Amendment CJEU VAT dReport newsletter

Mandatory Information in Project Documentation for Deduction of Research and Development: Extreme Formalism or Legitimate Expectations?

Requirements for the content of the document entitled “Research and Development Project” (currently “Project Documentation”) became a subject matter of numerous disputes between taxpayers and the tax administrator. The Supreme Administrative Court repeatedly confirmed that only the Research and Development Projects containing all exhaustively listed requirements give rise to the entitlement to use the deduction of research and development. The amendment to the Income Taxes Act has changed the concept of using the deduction since 1 April 2019 in order to remove the then perceived shortcomings in the law and make the deduction simpler, more attractive and more available to a greater number of taxpayers. The government even stated that the deduction of research and development would be the most significantly subsidised form of public financing for corporate investments. 

30. 3. 2021

Tax Package at the Constitutional Court of the Czech Republic

As we have informed you in our previous articles, during the approval process of the Tax Package for 2021 (amendment of the Income Taxes Act as of 1. 1. 2021), doubts arose as to whether the legislative process took place in a constitutionally prescribed manner. Now, a group of senators asked the Constitutional Court of the Czech Republic to review the constitutionality of the Act’s approval process and proposed it be abolished. According to the Constitution of the Czech Republic, the Constitutional Court can decide on the abolishment of an act should it be contrary to the constitutional order. 

23. 3. 2021

Accommodation of foreign nationals and obligations of accommodation providers

Reporting the place of residence of foreign nationals in the Czech Republic is associated with a number of issues. Who is obliged to report the place of residence after foreign nationals enter the Czech Republic? How to proceed with changing their address in the territory? What documents does the Ministry of the Interior accept? This time, we deal with the issue of accommodating foreign national from their perspective as well as from the perspective of accommodation providers. 

23. 3. 2021