Planned changes to VAT in 2016

New special adjustment to the electronic form of submission

The submissions related to VAT that will not be in the required form and structure should be considered ineffective. This could affect the tax payer significantly in a negative way, especially through sanctions, because even if the tax payer sends the submission in time, the tax administrator will consider it not submitted. Currently, the submissions that do not fulfil the format and structure are considered ineffective, and the tax payer is requested to correct the defects.

Applying the first reduced VAT rate on catering services

With respect to the Act on Electronic Recording-keeping of Cash Sales, it is proposed that the catering services (excluding alcoholic drinks) will be transferred to the reduced 15% VAT rate.

Change of the territorial jurisdiction for an entity obliged to pay tax who does not have a seat or business premises in the Czech Republic

Such entities will belong to the Financial Office for the Moravian-Silesian Region instead of the Financial Office for Prague. The reason is to ease the capacity of the Prague Financial Office.

Cancellation of the special regime for free customs zones and bonded warehouses

Release of goods in the free zones and supply of goods in the free zones or bonded warehouses (including providing related services) should be subject to VAT.

Application of the reverse charge regime will be extended

The regime should now be applicable to (i) supply of goods with the place of supply in the Czech Republic by an entity not having a registered office in the Czech Republic to a payer in the Czech Republic and also (ii) supply of electricity to an electricity trader.

Change to the provision for the purposes of adjustment of VAT on receivables against a debtor in insolvency

The aim is to confirm the original intention of the creators of the act, i.e. to enable tax entities to adjust receivables against debtors in insolvency for the receivables older than 6 months and before the court decides about the insolvency. The change to the wording of the respective provision responds to the conclusions of the Supreme Administrative Court, which in its decision, interpreted a not entirely clear provision of the act in the opposite way, i.e. that adjustment to VAT concerns receivables of 6 months or less.