Michaela Merz

Czech Republic – New amendment of the Czech VAT Act

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750686_web_R_by_detlef menzel_pixelio.deBelow you can find information about the draft amendment of the Czech VAT Act that is expected to come into effect from 1 May 2016.

The draft amendment, among other, introduces the local reverse charge in case the supply of goods to a Czech VAT payer is performed by a non-established person, i.e. the Article 194 of the EU VAT Directive is being implemented into the Czech VAT Act.


The Czech VAT Act amendment introduces the following rules:

 “A person liable to pay the VAT will be a VAT payer that acquired goods with the place of supply in the Czech Republic from a person not established in the Czech Republic, that is not a registered VAT payer in the Czech Republic; this provision does not apply to cases when the VAT payer who acquired the goods did not fulfil its obligation to register within the set period, until the day the decision of VAT payer’s registration came into force.

Further, the VAT Act will provide a transition measure for non-established entities that are already registered for VAT in the Czech Republic to de-register, so that the local reverse charge can be used by them.

“Taxable person that is not established in the Czech Republic and that became the VAT payer according to the Section 6c (2) of the Czech VAT Act, may apply for termination of VAT registration within 6 month period after the amendment comes into force provided it only performs local sales to VAT payers with a place of supply in the Czech Republic.”


Practical implications for supply of goods performed by non-established person that is not registered for VAT in the Czech Republic

  • Any local supply of goods to a registered Czech VAT payer is subject to the local reverse-charge mechanism,
    i.e. the recipient of the supply is obliged to account for the VAT. The non-established person is not obliged to register for VAT in the Czech Republic.
  • Any supply of goods to the final customer (B2C transaction) or to a person that did not fulfil the obligation of VAT registration is subject to the standard regime, i.e. the supplier is already obliged to charge VAT and register as a Czech VAT payer for the first supply.
  • I believe that the wording of the draft amendment does not affect the option of voluntary registration for VAT
    in the Czech Republic. However, the practical approach of the Czech tax authorities is currently not known.

Practical implications for non-established person that is already registered for VAT in the Czech Republic

  • The reverse charge rule will not apply in case that a non-established person is already registered for VAT in the Czech Republic, i.e. the supplier is obliged to charge VAT under the standard regime.
  • The transition measure gives an option to de-register from Czech VAT if the conditions are fulfilled.

With respect to the possibility of Czech VAT registration termination allowed by the transition measure, I highly recommend considering all the related aspects and thoroughly analysing the supply chain and all transactions performed by the respective person.

My local colleagues are ready to analyse the aspects of the draft amendment as they pertain to your current and planned business activities in the Czech Republic.

For further details please contact our specialist Michaela Vrana
on +420251152513 or by mail michaela.vrana@cz.pwc.com

Image source: Detlef Menzel  / pixelio.de

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