Tax package effective from 1 July 2017

The amendment to tax laws that we informed you about earlier was published in the Collection of Laws and will become effective from 1 July 2017. Most of the changes to value added tax will become effective at that time. A majority of the changes to income tax will not be reflected until the 2018 tax period (or the tax period beginning on 1 July 2017 or later if the tax period is a fiscal year), but there will be certain exceptions. Detailed information on the tax package can be found in our Tax News (KempHoogstad Tax News-12/2016, KempHoogstad Tax News 4/2017, and KempHoogstad Tax News 6/2017).

With respect to the tax package, the General Financial Directorate issued information on the interpretation of some of the changes to VAT. These are:

1. Information on the application of VAT for received payments (in Czech only: Informace GFŘ k aplikaci ustanovení §20a zákona o DPH)
2. Information on adjustments to VAT claims regarding deficits in goods and damages (in Czech only: Informace GFŘ k uplatňování zákona o DPH při vyrovnání odpočtu daně dle § 77 odst. 2 písm. c) a úpravy odpočtu dle §78e zákona o DPH and Přílohy k informaci k § 77 a § 78e)
3. Information on the concept of unreliable person (in Czech only: Informace GFŘ k aplikaci institutu nespolehlivé osoby a související problematiky podle zákona č. 235/2004 Sb., o dani z přidané hodnoty, ve znění pozdějších předpisů)
4. Information on extension of the reverse charge regime (in Czech only: Informace GFŘ k režimu přenesení daňové povinnosti u vybraných plnění s účinností od 1. 7. 2017)
5. Updated directive related to filling in the inspection report with respect to changes to the law (in Czech only: Pokyny k vyplnění kontrolního hlášení DPH and Přehled změn k 16. 6. 2017)

The most anticipated interpretation, because of real life situations, was the one on the application of Section 20(a) of the VAT Act, which adjusts VAT withholdings from received payments. The act stipulates new specific conditions necessary for the duty to withhold VAT but the published information on the VAT application suggests that interpretations of the financial administration tend not to significantly change the current real status.

To complete the information, we would like to inform you that information on the application of VAT regarding members of an association is being prepared. This information should provide instructions on how members should proceed regarding VAT in the future because the amendment revoked all specific provisions governing VAT for associations.