The Constitutional Court’s judgement regarding some aspects of the ERS

Last week, the Constitutional Court decided about cancelling some provisions of the Electronic Registration of Sales Act; the decision complies with requests of a group of members of parliament representing ODS and TOP 09.

For tax payers who are not yet obliged to participate in the electronic registration of sales (the ERS), the most important thing is that the provisions which were supposed to start the third phase (from 1 March 2018) and fourth phase (from 1 June 2018) of the ERS have been cancelled, effective from 28 February 2018. For now, only entities who receive their income from accommodation and catering services, wholesale, and retail are obligated to participate in the ERS. Others, such as liberal professions, doctors, lawyers, tax and accounting advisors or providers of similar services, entrepreneurs in transportation or agriculture, food producers, etc. can wait with preparations for the ERS.

The Ministry of Finance informs about the ongoing preparation of an amendment to the ERS Act which should include results of the mentioned judgement. It is assumed that the Ministry will try to determine the obligation to the ERS for the stated entities in the future again even if the amendment would suggest some more exceptions for the stated entities. Exceptions from the ERS granted to some entities now by a governmental decree (e.g. to blind persons or sellers of fresh water fish) stay effective only until 31 December 2018, because the Constitutional Court waived the possibility of granting exceptions by the government. From now, the exceptions should be regulated by law.

Effective from 1 March 2018, the Constitutional Court cancelled the obligation to register payments carried out by a payment card or other cashless methods included in the ERS because these are transactions that can be traceable by other means. The mentioned payment methods are used by entities that were required to install the ERS during the first and second phases and had to invest in the ERS instruments. So the question is whether cancellation of the obligation to register the given payments methods will be implemented in real life, because changing the system set up can mean additional costs. Such payments can be registered voluntarily, and customers can receive sales slips.

The last cancelled provision is related to the obligation to state the tax ID on the sale slip. According to the proposers of the constitutional complaint, this contradicts the protection of privacy, because private individuals have their birth numbers as tax IDs. From 1 March 2018, the tax ID does not have to be stated on the sale slips, but it will be included in the data message sent in the ERS system. If the sale slip is a tax document from the VAT point of view (the tax ID is a mandatory piece of data), the obligation is not affected under the VAT Act.

We will keep you informed about developments in this area, especially preparation of the amendment.