Czech Republic: VAT amendment

The Government has submitted to external comments the VAT Law amendment. The most significant changes scheduled to become effective from 2013 are as follows.

The amendment introduces a new concept of proving the authenticity, the integrity of the content and the legibility of an invoice through business controls which create a reliable audit trail between an invoice and a supply of goods or services. The General Financial Directorate will probably issue a methodology specifying details of such business controls.

The amendment aims to reduce the administrative burden connected with issuing electronic tax documents, thus an electronic signature will no longer be required. However, the customer will also have to agree to the electronic form of the invoice.

One of the most important changes concerning the real estate market is the proposed extension of the period after which the transfer of buildings, flats and non-residential space will become VAT exempt from 3 to 5 years. Taxpayers will then have the option to decide whether to use the exemption or not.

Persons who have to declare VAT on goods acquired from another Member State or on services received from a person established outside the Czech Republic, as well as persons providing service with the place of supply in another Member State, will no longer be required to register as “standard” VAT payers, but they become persons identified for VAT. As such persons identified for VAT will not be obliged to tax their effected transactions, but will only pay VAT from received supplies without being entitled to deduct related input VAT.

The amendment introduces a reduction of the turnover threshold for mandatory VAT registration of taxpayers with seat or place of business in the Czech Republic to 750 000 CZK registered in the past 12 consecutive calendar months.

The proposed amendment extends the mandatory electronic reporting of the following documents: regular and additional VAT returns, all forms of other VAT related reporting, attachments to the regular or additional VAT return or reports, notification of change of registration data, VAT registration application.

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