EET 2.0: financial administration’s position on contact payments

A contact payment is defined as a payment made during personal contact with an entrepreneur or in connection with the ordering or collection of goods or services at their premises. The form of payment itself is not decisive, as both cash and non-cash payments may be subject to reporting, including card payments, bank transfers, QR payments, direct debits, vouchers, and similar means. The difference is that non-cash payments that do not meet the criteria for contact payments should not be electronically reported: typically, these will be payments made remotely via a payment gateway in an online shop or a QR code on a website.

The rules for cash payments are stricter: they must be reported even if they take place outside the business premises or without personal contact with the entrepreneur. An exception is where an intermediary collects cash from the customer (for example, in the case of cash on delivery) and subsequently transfers it to the entrepreneur’s account. The EET also covers a deposit or similar security provided by means of a contact payment, as well as payments intended for subsequent drawing or settlement, including their subsequent drawing and settlement if they meet the conditions for sales subject to the electronic reporting obligation.

In the financial administration’s answers to questions, the examples concerning e shops and the combined operation of a physical store and an e shop are particularly relevant:

• If a customer pays entirely online via a payment gateway and simply collects at the shop the goods they have already paid for, this transaction is not subject to the reporting obligation.
   
• If a customer pays only upon collection at the shop or collection point, whether in cash, by card or via a QR code, this constitutes a contact payment and the obligation to report this transaction applies.
   
• The same logic is to apply to on-site services – for example, a payment received from a customer on-site must be reported, whereas a bank transfer made remotely without personal contact does not need to be reported.

The financial administration points out that the actual method of payment is decisive: if a bank transfer is stated as a payment method in the invoice but the customer in fact pays in cash at the till, the sale must be reported.

The financial administration’s responses are based on the principle that the sales reporting obligation applies to business income of both natural and legal persons. For natural persons, it is explicitly stated that occasional activities that are not of a business nature, such as seasonal sale of surplus produce from a garden, are typically not subject to the reporting obligation provided that they do not become a business through repetition and the intention to make a profit.

At the same time, the financial administration states that the assessment of whether a certain transaction is subject to the reporting obligation is not linked to the VAT payer status, so the electronic sales reporting may also apply to VAT non-payers if they receive income in the form of contact payment.

Entrepreneurs subject to lump-sum tax in the first band can make use of the special “EET OFF” scheme and not report their sales in the system. However, their lump-sum tax will increase by CZK 1,400 per month (more on the EET OFF scheme in this article).

Last but not least, the financial administration indicates that it will not object if a taxpayer decides to report all of their sales, including those excluded from the EET.