2 April 2019

2019 amendment to VAT Act: summary of major changes, vol. 2

Over the last year, in our Tax and Legal Update, we have discussed the changes to VAT that are part of the 2019 tax package many times. The final version of the amendment is on the table now, giving us the chance to summarise the major changes and applicable dates once again. The tax package was published in the Collection of Laws under No. 80/2019 and is effective from 1 April 2019.

Petra Němcová
Veronika Výborná

It has been possible to use the direct effects of the EU VAT Directive and apply the amended provisions on vouchers and electronically supplied services (certain simplifications regarding mini-one-stop-shops) from 1 January 2019; this was communicated by the Czech tax administration earlier this year. The majority of other changes became effective on 1 April 2019.

Major changes include, for example, a new duty to state the date of supply on corrective tax documents or make every necessary effort to deliver a tax document to the supply recipient or determine the date of supply for lease-related services as the date on which the amount being rebilled is known.

The amendment also introduces the duty to monitor significant repairs of real property costing more than CZK 200 thousand (excl. VAT) and to correct the entitlement to VAT deduction originally claimed where the real property is sold exempt from VAT within a period of ten years. The decisive factor for the taxpayer is when the repair started and ended. If it started before the amendment’s effective date but ended after this date, the taxpayer may decide whether to adjust the deduction.

The changes designed to unify the amount of tax using either the top-down vs. the bottom-up calculation approach and relating to tax rounding also become effective from 1 April. Nonetheless, based on transitory provisions, it is possible to proceed in compliance with the “old” rules in the subsequent six months, providing sufficient time for the necessary adjustment of accounting and invoicing systems.

Enough time should also be granted to lease companies, since changes to the classification of leases (depending on whether it involves the delivery of goods or the provision of services) will not become effective sooner than 2020.

The effective date will be postponed even further concerning the categories of leases that can be subject to output VAT. Provisions according to which the lease of buildings in which at least 60% of the floor area is used for residential purposes may not be regarded as liable to but as exempt from VAT will not come into effect earlier than in 2021.

Changes relating to the VAT regime of statutory representatives and price subsidies were cancelled during the legislative process. These VAT areas therefore remain unchanged. 

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