In the amendment to the VAT Act scheduled to take effect from 1 July 2021, changes should be made to the application of value added tax (VAT) to electronic commerce (i.e. e-commerce). These changes concern the rules for determining the Member State of taxation and will affect in particular sellers of goods who sell goods to other EU Member States to end customers, for example via e-shops.
These changes are contained in the amendment to the VAT Act, which is currently in the legislative process under Parliamentary Document No. 867. The amendment to the VAT Act has not yet been approved and therefore its effectiveness may be delayed.
With this rule change, the special mode of the one Mini One Stop Shop (MOSS) is expanded to that of a One Stop Shop (OSS). Applications to enroll in this simplified regime can be submitted as early as 1 April 2021, with the proviso that the payment of VAT under its simplified rules will be possible from 1 July 2021.
OSS can be used by distance sellers (e-shops) to EU customers, by EU customer service providers and by electronic interface operators (digital platform).
Who is affected by this regime?
The operator of the electronic interface is a taxable person who, using an electronic interface (e.g. electronic marketplace, platform, portal), facilitates the supply of goods or the provision of a service. Sellers use the space on the so-called electronic marketplace to sell their goods and the operator of the electronic interface facilitates delivery between the seller and the end customer. The operator of the electronic interface usually sets the conditions for delivery, transport, payment or return of the goods.
Thus, for example, if Czech taxpayers deliver goods of up to EUR 10,000 cross-border, they issue tax vouchers which specify Czech tax and pay taxes in the Czech Republic. However, if the annual value is more than EUR 10 000 per year, the taxpayer has two options:
- They register in all countries to which they delivered goods and fulfill their tax obligations there.
- They enroll in the special regime of the One Stop Shop on the portal of the Czech Tax Administration.
In these cases, OSS registration is used to pay VAT in the Czech Republic for selected transactions which are provided cross-border to the final consumers in other EU countries and for which there exists an obligation to pay VAT in the consumer’s Member State (Member State of consumption). The supplier (OSS user) registers for the OSS regime and pays VAT in only one EU Member State (i.e. in the Czech Republic), although they engage in EU cross-border supply.
The use of the special regime of One Stop Shop (OSS) is not mandatory, but it significantly simplifies the payment of VAT to users for selected transactions for which VAT is to be collected in another EU Member State. The tax administrator overseeing the special regime of the One Stop Shop is the Tax Office for the South Moravian Region, Brno I Regional Office.
Amended VAT Act