The President of the Czech Republic signed a new fiscal law “Act No. 112/2016, the Electronic evidence of sales Act”, in March 2016. New legislation will concern those who are taxpayers of a personal or corporate income tax and the payment meets the formal requirements for a registered sale, e.g. it is made in cash, by credit card, cheque, voucher or in any similar way. However, defined payments are not subject to the electronic evidence of sales like payments done via a bank transfer, income which is not subject to income tax, etc.
As from 1 of December the first businesses providing restaurant and accommodation services will have to electronically evidence its sales. As from 1 of March 2017 retailers and wholesalers will follow, one year later March 1, 2018 all other operations will have to adopt the new system apart of selected crafts which will be the last one due on June 1, 2018.
Devices, that can communicate electronically via the Internet in real time with the Tax Authority is requested. Information in XML format about the sale will be submitted to the Tax Authority. They will provide a fiscal code back to the seller confirming correct receipt of the information. This fiscal code will be used on the receipt issued to the customer and will allow the customer and the tax authority to check whether the sale was register. Information cycle will be complete and transparent. Ministry of Finance expects that with this new measure the budget revenues should significantly increase.
In order to comply with this new regulation, it is vital to purchase a device or special software that can communicate electronically via the Internet in real time with the Tax Authority. Tax deduction of up to 5,000 CZK as the contribution for the purchase of new equipment in form of tax relief. This deduction is not applicable for the companies, but only for natural persons.
All taxpayers must in a first place apply for access details to the special portal in which initial setup is needed. Setup is a pre-condition for making the first registered sale. It consists of verifying taxpayer’s information, including for example the shop location, upon which taxpayer will receives his/her digital certificate. This certificate should be installed in cash register device or sales application and enable access to the tax authorities’ server when exchanging data messages and fiscal codes. It is possible to download as many certificates as needed. Tax payers can obtain the access details to the portal electronically or personally by visiting one of 201 tax offices across the country.
Very narrow group of taxpayers may apply so called “simplified regime”. Taxpayer who for example does not have a continuous internet access can obtain permission from the local administration to work in a simplified regime. Taxpayer in “simplified regime” must also deliver fiscal receipt to the customer, however, this receipt does not contain fiscal code which is obtained in the basic mode, which must be printed on receipt of the online taxpayers. Such sale must be then registered within 5 days from the day it was made.
Some taxpayers are also excluded from the electronic evidence of sales. Exclusions relate mostly to sectors which are currently already significantly regulated and the electronic evidence of sales would not be beneficial for the tax authorities.
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This thorny journey for CZ government came to a successful closure.
Czechs embraced one of the most effective ways of fiscalization. Good luck Czechs!