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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/1/2013

Czech Republic: VAT essentials 

Essential information regarding VAT as it applies in Czech Republic.


Scope and Rates

What supplies are liable to VAT?


The following transactions are subject to VAT in the Czech Republic:


  • supply of goods or services with the place of supply in the Czech Republic, where it is a supply made by a taxable person in the course of its economic activity
  • • acquisition of goods from another EU Member State for consideration by a taxable person in the course of its economic activity or by a non-taxable legal person , where the place of acquisition is in the Czech Republic
  • acquisition of new means of transport from another EU Member State also by a non-taxable person
  • import of goods with place of supply in the Czech Republic

Exceptions to the above mentioned general rule exist. Furthermore, certain supplies made for no consideration are deemed to be subject to VAT, for example:


  • certain free of charge supply of goods, private use of business assets
  • putting fixed assets of own production into the condition fit for use if the VAT payer uses these assets for purposes of transactions with limited right to deduct input VAT.

What is the standard rate of VAT?


The standard rate of VAT is 21 percent.


Are there any reduced rates, zero rates, or exemptions?


Reduced rates


There is a reduced rate of 15 percent (potential increased to 17.5 or to 15% depending on the vote on current proposals) for certain goods and services, including:


  • construction and assembly works related to construction of certain categories of residential buildings and flats in these buildings
  • construction and assembly works related to alteration or repair of completed residential buildings and flats in these buildings
  • sewage services, water supply, and related services
  • certain health and social care services
  • public transport services
  • accommodation services
  • granting the right of admission to film performances, museums and other similar establishments
  • granting admission right to sport events, the use of sport facilities for sport activities
  • food products including beverages (with exception of alcoholic beverages)
  • heat and cold (refrigeration)
  • books, brochures, newspapers, and magazines where advertisements do not exceed 50 percent of the space, picture books, books for children, and some other printed paper
  • supply of specific products, services, and aids for the handicapped and health purposes

The reduced rate shall apply only if transaction complies both with the description and corresponding code of harmonized product/service classification.


Zero-rate


There is an extensive list of supplies which are zero rated, if certain conditions are met, including:


  • international transport of goods relating to export or import of goods
  • exports of goods
  • intra-Community supplies of goods, etc.

There is an extensive list of supplies which are exempt, if certain conditions are met, including:


  • insurance services
  • financial services
  • postal services
  • betting, gaming, and lotteries
  • education
  • health and social welfare
  • television and radio broadcasting
  • transfer of land including financial leasing of land (excluding the transfer of building land)
  • transfer of immovable property (buildings, flats, and non-residential premises) - after three years of the first approval (occupation certificate) or from the date when the use of such property commenced whichever is earlier.
  • leasing of land and immovable property (apart from short-term renting of immovable property, renting a parking space and hire of safes or permanently installed devices and equipment). In case of leasing of immovable property, option to tax exists in certain situations.
  • Supply of services by an independent group of persons, which is a legal entity, to its members who only perform VAT exempt supplies or supplies not subject to VAT.

Note: it is not possible to recover VAT incurred in making exempt supplies.


What are the other local indirect taxes beside VAT?


  • excise duties (on mineral oils, alcohol, beer, wine and wine semi-products and tobacco products)
  • environmental taxes (on gases, solid fuels and electricity).

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Registration

Who is required to register for Czech VAT?



Czech Entities (taxable persons established in the Czech Republic)


Czech entities become a VAT payer and are required to register for VAT in various situations, including:


  • a Czech entity makes supplies in the Czech Republic exceeding the VAT registration threshold of CZK 1,000,000 (about EUR 40,000) in 12 successive calendar months
  • a Czech entity that provides services with the place of supply in the Czech Republic (with the exception of exempt services) through its fixed establishment situated outside of the Czech Republic
  • voluntary registration is possible for a Czech entity who performs or will perform transactions with the right to deduct VAT.

Non-Czech Entities (taxable persons not established in the Czech Republic)


There is no registration threshold for non-Czech entities. Non-Czech entities become a VAT payer and are required to register for VAT in various situations, including:


  • a non-Czech entity makes a taxable supply for which it has to account for Czech VAT
  • a non-Czech entity which supplies goods from the Czech Republic to another EU Member State
  • Voluntary registration is possible for entities not established in the Czech Republic who will perform transactions with the right to deduct VAT with the place of supply in the Czech Republic.

The above list is not exhaustive. VAT registration is required also in several other situations.


Are there penalties for not registering or late registration?


There is no specific penalty for non registration or late registration. However, if VAT liability is not declared and paid within statutory deadlines, late payment interest, penalty for not filing / late filing of VAT return and an additional penalty (if tax is assessed by the tax authority) might apply.


Is voluntary VAT registration possible for an overseas company?


Yes. If a taxable person has a fixed establishment in the Czech Republic, it can register voluntarily if it performs or will perform transactions with the right to deduct VAT.


If a taxable person does not have a fixed establishment in the Czech Republic, it can register voluntarily if it will perform transactions with the right to deduct VAT with the place of supply in the Czech Republic.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


It is possible to avoid registering and accounting for Czech VAT when making certain supplies.


In the following examples the obligation to account for the VAT due can be shifted to the customer provided that it is registered for VAT in the Czech Republic.


Triangulation


If the business registered for VAT purposes in other EU Member State is an intermediate supplier to a Czech buyer of goods which the intermediate supplier purchases from a business in an EU Member State other than its own and where these goods are delivered from there directly to the Czech Republic, VAT due can be accounted for by the Czech customer (see section Invoices); i.e. intermediate supplier is not obliged to register for VAT in the Czech Republic with respect to this transaction. Certain conditions, however, must be met.


Call-Off Stock


Transaction where a person registered for VAT purposes in another EU Member State transfers its own goods from another EU Member State to the Czech Republic, where the goods are held in a local stock and predetermined for a sales contract with one local buyer, but title does not pass to that buyer until the goods are called off from that stock, may be treated as an intra-Community acquisition of goods by the local buyer. One of the main conditions for the call-off stock simplification to be applied is that the supplier who supplies goods through call-off stock is not registered for Czech VAT.


Supply and Install


If a taxable person which is not established in the Czech Republic supplies goods with installation/assembly in the Czech Republic, the Czech customer should account for any VAT due, provided that the customer is registered for Czech VAT or person identified for VAT. This is on condition that the supplier either does not have a fixed establishment in the Czech Republic or if it has a fixed establishment in the Czech Republic, this fixed establishment is not involved in the supply of goods with installation.


Reverse Charge Services


These services are covered in more detail at section International Supplies of Goods and Services.


Bear in mind that all these provisions are subject to particular requirements.


Does an overseas company need to appoint a fiscal representative?


No, the Czech VAT law does not contain any provision relating to fiscal representative.

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VAT grouping

Is VAT grouping possible?


Yes.


Can an overseas company be included in a VAT group?


In the case of overseas company, only its Czech fixed establishment can be included in the VAT group.


VAT group is considered a separate taxable person.

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Returns

How frequently are VAT returns submitted?


VAT returns are generally submitted on a monthly basis.


Under certain circumstances, VAT payer can opt for a quarterly period. However, quarterly period is not possible for VAT groups and taxable persons who exceeded the turnover of CZK 10,000,000 in the previous calendar year.


Are there any other returns that need to be submitted?


EC Sales List


The Czech VAT payer shall submit a Recapitulative Statement (EC Sales List) in the following situations:


  • when it carries out intra-Community supply of goods from Czech Republic to another EU Member State to person registered for VAT in another EU Member States or transfer own goods to another EU Member State (with certain exceptions),
  • when it is the middleman in the triangulation simplification,where it supplies services under Article 44 of the Council Directive 112/2006/EC with place of supply in another EU Member State, if the service is taxable in that EU Member State. Based on prevailing interpretations this applies to VAT payers established in the Czech Republic or who have a fixed establishment in the Czech Republic, if this fixed establishment is supplying the service.

The person identified for VAT in the Czech Republic shall submit an EC Sales List when it supplied a service under Article 44 of the Council Directive 112/2006/EC to a person registered for VAT in another EU Member State with the place of supply in another EU Member State, if that service is taxable and the customer is liable to declare VAT.


EC Sales List is generally filed on a monthly basis. However, if VAT payer's obligation to file EC Sales List arises only with respect to supply of services, filing of EC Sales List shall be done in the same frequency as filing of the VAT return. EC Sales List must be filed in electronic form.


Intrastat


VAT registered businesses with a value of dispatches or arrivals of goods to or from other EU Member States, which exceed a threshold (CZK 8,000,000 for dispatches or CZK 8,000,000 for arrivals per calendar year) must complete Intrastat declarations each month.


Recapitulative statements with respect to local reverse-charge supplies


Czech VAT payers who supply or receive transactions which are subject to local reverse-charge (e.g. construction and assembly works, waste and scrap) must file specific recapitulative statements on a monthly basis. These statements must be filed in electronic form.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


Amount of VAT shall be stated in Czech currency on the invoice in situations where the issuing of invoice is subject to the invoicing requirements of the Czech VAT Act (e.g. local purchases).


In other situations, one of the following should be used:


  • the exchange rate of the Czech National Bank effective for the person issuing the invoice as of the day of obligation to report VAT
  • the most recent exchange rate published by the European Central Bank.

In the case of import of goods, exchange rate valid for customs purposes shall be used in order to convert the amounts into Czech currency.

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VAT recovery

Can a business recover VAT if it is not registered?


Yes. Person registered for VAT in another EU Member State who are established in another EU Member State or have a fixed establishment in another EU Member State should make a claim under Directive 2008/09/EC. The condition for VAT refund is the submission of a VAT refund application via the electronic portal in another EU Member State where the person registered for VAT is established or has a fixed establishment. Deadline for filing a VAT refund application is 30 September of the calendar year following the period subject to VAT refund claim.


Persons who are not established in the EU and do not have a fixed establishment in the EU should recover the VAT under the Directive 86/560/EEC. Application for VAT refund is filled with Tax Authority pro hlavní město Praha. Deadline for filing the application is 30 June of the calendar year following the period covered by VAT refund claim.


Note that refunds based on the Directive 86/560/EEC do not cover such things as travel costs, accommodation costs, meals, telecommunication costs, taxi, and fuel.


In both of the above mentioned situations, entitlement for deduction of input VAT is subject to conditions stipulated by the Czech VAT Act.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


Yes. Reciprocity applies to VAT refund to persons who are not established in the EU and do not have a fixed establishment in the EU. Currently, VAT refund is possible with Switzerland, Norway and Macedonia.


Are there any items that you cannot recover VAT on?


Yes. There are certain items that you cannot recover VAT on. For example:


  • exempt supplies: where VAT relates to exempt supplies, there is no right for deduction. Where VAT relates to both taxable and exempt supplies, an apportionment is required. In certain situations, deduction of VAT can be subject to adjustments up to 10 calendar years.
  • non-business (including private) activities: where VAT relates to non-business activities, there is no right for deduction. Where VAT relates to business and non-business activities, an apportionment is required.

Alternatively, the VAT payer can decide to deduct also input VAT related to non-business activity and treat subsequent use for non-business purposes as taxable transaction. This alternative approach is not possible in case of fixed assets.


In certain situations, deduction of VAT can be subject to adjustments up to 5 calendar years (or up to 10 calendar years in case of real estate).


  • Business entertainment: VAT is not generally recoverable on business entertainment costs • Business gifts and samples: VAT is not recoverable, except for business gifts used for purposes of economic activity of a VAT payer, if the acquisition cost of such gift, excluding VAT, does not exceed CZK 500 and supply of business samples free of charge for purposes of economic activity. If these conditions are met, extent of recovery of input VAT depends on type of economic activity (taxable/exempt/mixed) for which the gift or business sample is used.
  • Employee benefits: VAT is usually not recoverable.
  • Entry to Sporting Facilities, Events, Entry to Clubs, etc: VAT is usually not recoverable.
  • Tour Operators' Margin Scheme: VAT is not recoverable
  • Margin Schemes for Second Hand Goods: VAT is not recoverable
  • Retail Schemes: taxable persons buying goods for the purpose of reselling them in an unaltered condition and who cannot establish precisely their output VAT from their daily records of receipts for sales may ask the local tax authority to determine an individual method of computing their tax liability.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods supplied to another EU Member State


If a VAT payer supplies goods for consideration to another EU Member State to a customer who is registered for VAT in another EU Member State and the dispatch or transport of goods to another EU Member State is arranged by the VAT payer, the customer or third party authorized by one of them, the supply of goods is zero-rated.


The VAT payer must obtain customer's VAT number and quote it on the invoice. He must be able to prove that goods were supplied to another EU Member State; i.e. the goods physically left the Czech Republic.


Similar rules apply for transfer of own goods to another EU Member State by the VAT payer.


If the VAT payer supplies goods for consideration to another EU Member State to a customer for which acquisition of goods from another EU Member State is not subject to VAT, it will have to charge Czech VAT. If supplies exceed certain threshold for that Member State it may have to register in the Member State under what is known as the Distance Selling Scheme.


Goods supplied to a non-EU country


If a VAT payer exports goods outside of the EU, the supply is generally zero-rated, subject to the following conditions:


  • the goods left the territory of the EU
  • goods were placed in the customs regime export or another regime allowed by the VAT Act and
  • VAT payer is stated as exporter on customs declaration (SAD). In certain circumstances, it might be acceptable that customer is stated as exporter
  • dispatch or transport of such goods is arranged by the exporter or by a third party authorized thereto by the exporter. Dispatch or transport can also be arranged by the customer or a third party authorized by the customer on condition that the customer is not established and has no fixed establishment in the Czech Republic.

Export of goods shall not be zero rated if the customer transports goods for equipment of means of transport used for private purposes.


Provision of Services to Taxable Persons


Based on general rule for place of supply of services to taxable persons, the place of supply is where the customer has established its business or where it has a fixed establishment if the service is supplied to that fixed establishment. Exceptions to this rule exist, including:


  • services related to immovable property
  • services of transport of persons
  • services of right of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events
  • restaurant services
  • short-term rent of means of transport

In case of services where the place of supply should be outside of the EU in accordance with the above mentioned general rule, the place of supply is shifted to the Czech Republic if the customer is a Czech VAT payer and the service is used and enjoyed in the Czech Republic.


In case of services of short-term or long-term rent of means of transport where the place of supply should be outside of the EU in accordance with applicable rules for place of supply of services, the place of supply is shifted to the Czech Republic if the service is used and enjoyed in the Czech Republic. On the other hand, if the place of supply of such services would be in the Czech Republic in accordance with applicable rules, place of supply is shifted outside of the EU if the service is used and enjoyed outside of the EU.


If a VAT payer established in the Czech Republic supplies services with place of supply outside of the Czech Republic, supply of services shall be reported in the Czech VAT return and in case of services where place of supply is in another EU Member State based on general rule for place of supply of services to taxable persons, also in the EC Sales List. This applies accordingly for Czech fixed establishment if the supply of service is made by the fixed establishment.


In situations where VAT payer supplies services with place of supply outside of the Czech Republic, it is recommendable that it keeps documentation supporting determination of place of supply outside of the Czech Republic.


Provision of Services to Non-Taxable Persons


Based on general rule for place of supply of services to non-taxable persons, place of supply is where the supplier has established its business or where it has a fixed establishment if the service is supplied by that fixed establishment. Numerous exceptions to this rule exist, including:


  • all of the exceptions mentioned for taxable persons
  • services in the field of culture, education, arts, sports, science, entertainment and similar (covering but not limited to admission to events)
  • intermediation services
  • transport of goods
  • services directly related to transport of goods, services of valuation of movable goods and work on movable goods
  • telecommunication services and electronic services supplied by a taxable person established in a non-EU country or through a fixed establishment in a non-EU country to a non-taxable person in the Czech Republic
  • certain services supplied to non-taxable persons established in a non-EU country (mainly intellectual services).

In case of services of short-term or long-term rent of means of transport where the place of supply should be outside of the EU in accordance with applicable rules for place of supply of services, the place of supply is shifted to the Czech Republic if the service is used and enjoyed in the Czech Republic. On the other hand, if the place of supply of such services would be in the Czech Republic in accordance with applicable rules, place of supply is shifted outside of the EU if the service is used and enjoyed outside of the EU.


If the VAT payer established in the Czech Republic supplies services with place of supply outside of the Czech Republic, supply of services shall be reported in the Czech VAT return.


In situations where VAT payer supplies services with place of supply outside of the Czech Republic, it is recommendable that it keeps documentation supporting determination of place of supply outside of the Czech Republic.


How are goods dealt with on importation?


When goods are imported into the Czech Republic from outside the EU, import VAT and customs duty may be due. If Czech VAT payer acts as importer the import VAT is generally self-assessed via his/her VAT return.


How are services which are brought in from abroad treated for VAT purposes?


In case of services with place of supply in the Czech Republic purchased by a VAT payer or person identified for VAT, person liable to declare VAT is the customer (VAT payer/person identified for VAT) under the reverse-charge mechanism on condition that the service was supplied by a person not established in the Czech Republic and having no fixed establishment in the Czech Republic or if the Czech fixed establishment exists, it is not involved in the supply of the service. If the supplier is registered for Czech VAT without Czech fixed establishment involved in the supply of a service, this has no implications on use of reverse-charge by the customer.


Under the reverse charge, customer is required to account for VAT on output in its VAT return and it can recover this VAT as input tax in the same VAT return (under standard recovery rules). This means that if customer is able to recover all of its VAT, the reverse-charge is VAT compliance matter only (i.e. no VAT is actually paid to the tax authority).


In case of services with place of supply in the Czech Republic purchased by a taxable persons not established in the Czech Republic or non-taxable persons, supplier shall register for Czech VAT and declare VAT in its Czech VAT return and pay VAT upon supply. However, if the customer is a VAT payer, please refer to first paragraph.

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Invoices

Is a business required to issue tax invoices?


Generally, tax invoices should be issued in accordance with invoicing requirements of the EU Member State of the place of supply. In other words, supplies that have place of supply in the Czech Republic will generally be subject to Czech invoicing requirements.


However, there are exceptions to this rule, including the following:


  • if the supplier is established in another EU Member State than the Member State of the place of supply and the person liable to declare VAT is the customer, the invoicing requirements of the EU Member State in which supplier is established or has a fixed establishment through which the supply is made, should apply (e.g. reverse-charge services). If self-billing is agreed, this exception does not apply.
  • If the place of supply is outside of the EU, the invoicing requirements of the EU Member State in which the supplier is established or has a fixed establishment through which the supply is made, should apply.

Under the Czech invoicing requirements, a VAT payer is obliged to issue tax invoice in the following situations:


  • when it performs supplies to taxable persons or non-taxable legal persons; with the exception of exempt supplies with no right to deduct VAT. A VAT payer is also obliged to issue tax invoice when he receives advance payment for this supply,
  • when it performs distance sale of goods with the place of supply in the Czech Republic. A VAT payer is also obliged to issue tax invoice when he receives advance payment for this supply,
  • when it performs supply of goods to another EU Member State where the zero-rate applies,
  • in specific situations enumerated in the VAT Act.
  • Furthermore, taxable persons (not necessarily VAT payers) must issue tax invoices in the following situations:when it performs supply for a taxable person or a non-taxable legal person with the place of supply in the EU Member State in which that taxable person is not established and does not have a fixed establishment through which the supply is made, if the supply consists in the supply of service, supply of goods with installation or assembly or supply of goods through pipeline systems,
  • when it provides a service or supplies goods with installation or assembly for taxable person or non-taxable legal person, if the place of supply is outside the EU, or
  • when it receives an advance payment for the above mentioned supplies, if the advance payment gives rise to obligation to declare VAT or the supply (in the case of zero-rated supplies).

What do businesses have to show on a tax invoice?


Tax invoice must contain the following data:


  • the name (and supplements, if any) and address of the supplier
  • the VAT identification number of the supplier
  • the name (and supplements, if any) and address of the recipient
  • the VAT identification number of the recipient (if it is a Czech VAT payer)
  • the sequential number of the invoice
  • the extent and the scope of the transaction
  • the date the invoice was issued
  • the date on which transaction is performed (determined in accordance with VAT Act), or the date payment was received, whichever is earlier; if such date differs from the date of the issuance of the invoice
  • the unit price without VAT and discount if it is not included in the unit price
  • the taxable amount (VAT base)
  • the VAT rate

The amount of VAT in Czech currency. Tax invoice must also contain the following:


  • In the case of exempt supplies, the reference to the relevant provision of the Czech VAT Act, EU VAT Directive or another reference based on which the supply is exempt,
  • In the case of self-billing, statement “vystaveno zakaznikem” (i.e. “issued by the customer”)
  • In the case of supplies where the customer is liable to declare VAT “dan odvede zakaznik”(i.e. “VAT declared by the customer”).

Tax invoice does not have to contain the following data:


  • The VAT identification number of the customer, if the customer was not allocated such number,
  • The VAT rate, if the supply is exempt or if the person liable to declare VAT is the customer,
  • The extent of supply, the unit price without VAT and discount, if it is not included in the unit price, if the liability to declare VAT or supply performed (zero-rated supplies) arose with respect to the receipt of advance payment for the future supply.

The above are invoicing requirements for standard tax documents. However, there are specific invoicing requirements in certain situations.


In the case of correction of tax base and VAT after the taxable supply, in the case of correction of VAT amount only (e.g. due to previous incorrect application of VAT rate) and in the case of correction of VAT in the case of bad debts, corrective tax document (credit/debit note) shall be issued. There are specific invoicing requirements for corrective tax documents.


Can businesses issue invoices electronically?


Yes, subject to conditions.


Is it possible to operate self-billing?


Yes, subject to conditions.


Can a business issue VAT invoices denominated in a foreign currency?


Generally yes. However, amount of VAT must also be stated in Czech currency on the invoice.

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes. If a company sells its business as a going concern then VAT is not due.

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Options to Tax

Are there any options to tax transactions?


There is an option to tax certain types of transaction in immovable property. A VAT payer may decide whether to apply VAT on the operational lease of plots of land, buildings, flats, and non-residential premises to other Czech VAT payers for the purposes of their economic activities.


Transfer of plots of land, buildings, flats and non-residential premises is exempt after 5 years after the issue of the first building approval or from the date when the use of premises started, whichever is earlier. A VAT payer may decide to apply VAT on the transfer of even after the period of 5 years.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


Supply of services


There are no special rules in Czech VAT law. This issue has been, however, discussed with the Czech Ministry of Finance. They confirmed the generally accepted opinion that the provision of services between a head office and its branch (from legal point of view one legal entity) are not subject to VAT in the Czech Republic.


However, implications might differ in case of supplies concerning a VAT group. Should the Czech fixed establishment of an entity established outside of the Czech Republic be part of Czech VAT group, supply of services between Czech VAT group (i.e. including fixed establishment) and entity established outside of the Czech Republic would likely be subject to VAT. This would apply accordingly for supplies of services between an entity established in the Czech Republic which is part of Czech VAT group and foreign fixed establishment of this Czech entity.


Supply of goods


Supply of goods should be treated depending on the physical flow of goods, that is, deemed export/import, deemed intra-Community purchase/supply.

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Bad Debt

Am I able to claim relief for bad debts?


Yes. A VAT payer, whose liability to declare and pay VAT arose on effecting his taxable supply against another VAT payer and whose claim that arose latest 6 months before the court adjudicated an insolvency order concerning a person against whom the VAT payer has a claim that has not yet been lapsed, is entitled to make a correction of the VAT on output relating to the value of the determined claim. This is subject to several conditions.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


Yes. The general anti-avoidance provision is not directly stipulated in the Czech VAT law, but it is defined in the Tax Administration Law which generally covers all taxes.

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Penalty Regime

What is the penalty and interest regime like?


If the tax authority assesses an additional VAT liability, the penalty of 20 percent from such tax would be assessed. The same penalty would be assessed if the right for input VAT deduction is decreased by the tax authority.


In case of a voluntary disclosure, no penalty would be assessed by the tax authority.


In case there is a default with paying the tax liability, for each day of such default, the interest shall be calculated based on the interest rate of the Czech National Bank increased by 14 percentage points. The interest is assessed in both cases – if the additional tax is assessed by the tax authority based on a tax audit or if the additional tax is assessed based on a voluntary disclosure. Current (June 2012) interest rate of Czech National Bank is 0.75 percent.


If the tax return is not filed or is filed with a delay and such delay is longer than 5 working days, the penalty for late declaration of tax is assessed as follows:


  • 0,05 percent of VAT liability for each day of delay; up to 5 percent of VAT liability
  • 0,05 percent of VAT credit for each day of delay, up to 5 percent of VAT credit

Maximum amount of the penalty of late declaration of tax is CZK 300,000.

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Tax authorities

Tax audits


How often do tax audits take place?


There are no rules for this. Periodicity of VAT audits varies significantly from one VAT payer to another.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


No.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


Binding ruling is possible only for determination whether a concrete taxable supply is subject to reduced or standard VAT rate. Such ruling can be only formal.


Are rulings and decisions issued by the tax authorities publicly available in your country?


Rulings and decisions issued with respect to questions of a specific VAT payer are not publically available.


However, tax authorities sometimes issue general guidelines on VAT treatment in specific situations (e.g. exemptions in the health care). Furthermore, conclusions from public discussions between Chamber of tax advisors and General Tax Directorate are publically available.

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


Yes, there are numerous specific tax rules, including:


  • obligatory local reverse-charge applies to certain supplies, e.g. construction and assembly works, waste and scrap, emission allowances
  • customer’s liability for supplier’s unpaid VAT related to the supply made to the customer applies in situations specified by the VAT Act, e.g.:
    • consideration for the supply differs significantly from open-market value,
    • consideration is made wholly or partly through bank (non-cash payments) to the account held outside the Czech Republic,
    • consideration is made wholly or partly to the bank account not listed by the tax authority as supplier’s bank account,
    • taxable supply is purchased from a supplier who at the moment of supply was evidenced as non-reliable VAT payer by the tax authority,
    • the customer knew or should have known that the VAT stated on tax document will intentionally not be paid, the customer knew or should have known that there will be tax evasion from this supply.

    When customer is in doubt, it is possible to apply a special VAT regime (payment of VAT directly to the supplier’s tax administrator rather than to the supplier), if conditions are met.

  • self-supply of fixed assets is subject to VAT in the case of businesses with only partial deduction of VAT.

Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


No.

 

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