In addition to the planned increase in the turnover for compulsory VAT registration from one to two million CZK, which we have already informed you about, we would like to draw your attention to other legislative news concerning VAT, namely one already in force and another planned one.

1.    Change in the scope of the reverse charge regime

With effect from 10 August 2022, government regulation No. 261/2014 Coll., on the determination of the supply of goods or services for the application of the reverse charge regime, as amended, was amended in relation to the change in the combined nomenclature for selected goods (mobile telephones and metals) effective from 1 January 2022. Thus, the codes used in the government decree for selected products are now again in compliance with the customs tariff nomenclature as currently applicable. 
Furthermore, with effect from 10 August, the reverse charge regime for video game consoles was narrowed due to a change in the customs nomenclature code used. 
At the same time, the General Financial Directorate has confirmed that for goods, for which the amendment to the Government Decree changed the customs nomenclature codes and which were thus not subject to the reverse charge regime in the period from 1 January to 9 August 2022, it allows the use of a legal fiction for the application of the reverse charge regime under article 92 paragraph 7) of the VAT Act, without the need to correct the applied regime. Further details, including updated information from the GFD on the application of the reverse charge regime, can be found here. 

2.    Recording cross-border payments and their recipients – introducing control for e-commerce

Following the new rules for e-commerce (the special one-stop shop regime) and in order to ensure the currently insufficient control and detection of tax fraud in this area, the EU Council Directive (EU) 2020/284, which amends the VAT Directive 2006/112/EC, establishes new recording and reporting requirements for payment service providers with effect from 1 January 2024. Payment service providers will be required to keep records of cross-border payments and payees, specifically incoming payments from other EU Member States and outgoing payments to third countries, and the recipients of these payments. The obligation to keep records and to provide the tax authorities with the relevant information will then arise, when the number of cross-border payments relating to one person exceeds 25 per calendar quarter. The amendment to the VAT Act is therefore expected to take effect from the beginning of 2024, with the Ministry of Finance currently submitting it to the external comment procedure.  

Author: Richard Knobloch