VAT news [September 2021]
The Chamber of Deputies has approved an amendment to the VAT Act changing e-commerce rules. The Ministry of Finance has again extended the waiver of VAT on the supplies of respirators. And the Court of Justice of the EU has issued a decision that might result in changes in the practical approach to selling extended warranties in the Czech Republic. You can read not only about this in the latest VAT news.
VAT Act amendment concerning e-commerce rules
On 14 September, an amendment to the VAT Act was finally approved in the Chamber of Deputies, changing, among other things, the e-commerce rules. If the amendment is signed by the President of the Czech Republic, it should be published immediately in the Collection of Laws.
VAT waiver on the supplies of respirators
The waiver of VAT on the supplies of respirators has again been extended, this time until 31 October 2021. The waiver again affects not only the supplies, but also the intra-community acquisition or import of these goods.
The SAC’s view of internally generated assets
In its recent decision in case 2 Afs 232/2020-70, the Supreme Administrative Court rejected the General Financial Directorate’s view of the issue of the creation of internally generated assets. Unlike the GFD, the SAC concluded that such assets could be created also when a turnkey construction is delivered by a single contractor.
VAT liability and payment to an undisclosed account through the lens of the SAC’s decision
In case 2 Afs 382/2019-33, the Supreme Administrative Court concluded that when a taxable supply is paid to the account of a supplier not disclosed by the tax administrator, the recipient of the taxable supply is not automatically liable for VAT. In the court’s view, it is necessary to test the good faith of the recipient of the supply, i.e. whether they knew or should have known and could have known that the VAT would not be paid by the supplier. The conclusion of the court is contrary to the normal practice of the tax administration of the Czech Republic.
Judgements of the CJEU
Extended warranties through the lens of the CJEU
In case C‑695/19 Rádio Popular, the CJEU commented on the intermediation of extended warranties on goods. In the given situation, an option to enter into a contract between an insurance company and the buyer was offered to the buyer upon the purchase of goods. The seller of the goods collected a fee from the customer for an extended warranty. The CJEU regarded the money thus collected as consideration for VAT exempt supply (insurance intermediation), the full value of which must enter into the calculation of the coefficient for the reduction of input tax deduction. We believe that the decision may lead to changes in the practical approach to selling extended warranties in the Czech Republic.
Form of invoice for VAT purposes
In case C‑156/20 Zipvit, the Advocate General of the CJEU analyses under what circumstances the recipient of the taxable supply is entitled to deduct tax and what form the invoice issued by its supplier must take for that purpose. The Advocate General’s view could shed light on the rules for the right to deduct for supplies for which the recipient pays nothing (or pays only part of the price).