A bill which amends some of the taxation laws including the VAT Act has been signed by the President on 28 April 2017. The amendment of the VAT Act comes into force on the 15th day following its publication in the Collection of Laws. Since the date of publication was on 16 June 2017, the amendment will come into force on 1 July 2017. Please find below the summary of the most important changes in the VAT area.
Destruction, theft or robbery of assets and goods
The amendment clarifies how and when to pay VAT in case of the destruction, theft or robbery (further as losses) of business assets which is not sufficiently justified (e.g. shortfall of goods). Newly, it will be necessary to adjust the initially claimed input VAT. The adjustment will have to be performed in the taxable period in which the VAT payer finds out about the insufficiently justified losses of assets and goods. The appropriate part of a VAT deduction in the case of the fixed assets will have to be returned if the insufficiently justified losses take place within five years (ten years in the case of immovable property). The VAT payer also has to return the VAT deduction for goods or current assets if the insufficiently justified losses occur within three years from their acquisition. Practical aspects of the adjustment of the initially claimed input VAT from losses will be further detailed in the guidelines issued by the General Financial Directorate.
Another extension of the local reverse charge mechanism
The local reverse charge mechanism will also newly be applied to the hiring of workers for the purposes of construction and assembling services, supply of goods provided as a guarantee within the execution of such a guarantee, supply of goods after the assignment of the exclusive ownership rights and execution of this right by the assignee and in some other additional cases. The official guidance that is actually being prepared by the General Financial Directorate shall further specify details for such cases.
Payment of VAT from received advances
Czech VAT will clearly state that the obligation to pay output VAT from advances received before performance of a taxable supply arises only provided the following parameters of the future supply are known at the time the advance is received: type of goods or services to be provided, VAT rate and the place of supply. There is no obligation to pay output VAT if these
parameters are not known. This rule is applicable to both regular advance payments and to the sale of single- or multi-purpose vouchers (so-called SPV or MPV). In a true sense it is not really new, but is instead the inclusion of the settled interpretation of European legislation in the VAT Act. The examples of how to evaluate the above-mentioned parameters will be further detailed in the guidelines issued by the General Financial Directorate.
More information here.