2021 amendment to VAT Act: platforms and One-Stop-Shops
A draft amendment to the VAT Act, to enter into effect on 1 July 2021, introduces the deemed supplier concept for electronic interface operators (platforms). This concept should be applied when a platform facilitates certain distance sales of goods or distance sales of imported goods. To settle the appropriate VAT, platforms may use various mechanisms, one of which being the EU’s One-Stop-Shop (OSS).
A platform that meets the characteristics of a deemed supplier (as discussed in the last issue of the Tax and Legal Update) must resolve how it will settle the appropriate VAT. Where the facilitation of sales of goods of a foreign supplier established in the EU is concerned, two options in principle exist: first, it may register for VAT in all EU countries to which goods are dispatched; second, it may register for the union scheme under the One-Stop-Shop (OSS) regime, which offers a new and more simple alternative for these platforms. Registration for the OSS is voluntary.
An EU platform may register for the OSS (the union scheme) in its home country (state of identification). All VAT collected on selected supplies must then be declared through tax returns filed via a portal of the platform’s state of identification. The total tax amount is paid in euros to the account of the financial administration in the state of identification, which then distributes individual tax amounts to appropriate member states.
It should be possible to register for the OSS from 1 April 2021. In the Czech Republic, applications for registration can be submitted by entities that are VAT payers or persons identified for VAT. The authority with local jurisdiction shall be the Tax Authority for the Southern-Moravian Region. Registration is effective from the date of supply stated in the application or from the first date of the month following the month in which the application was filed, but not earlier than 1 July 2021. The union scheme’s identifier shall be the Tax Identification Number (DIČ).
Under the union scheme, VAT returns are filed for calendar quarters, always by the end of the following calendar month. The tax shall be expressed in euros using the rate of exchange for the last day of the taxable period, and payable within the deadline for filing a VAT return. The tax base shall be stated only in a standard VAT return; whereas only the tax amount is declared under the union scheme. If the taxpayer does not perform any selected supplies during the respective taxable period, they must file a zero VAT return.
Any corrections must be made within three years via a tax return for the period in which the reason for correction occurred. A special correction module will be used for this purpose. If allowed by domestic legal regulations of the state of consumption, after the three-year period it will be possible to correct the return directly in the state of consumption and not within the OSS.
The OSS regime represents a significant simplification for platforms (and other suppliers of selected supplies) that would otherwise have to deal with substantial administrative expenses for numerous VAT registrations in various states.