Richard Knobloch | 29.11.2024
Upcoming amendment to the VAT Act with effect from January 2025Taxes, accounting, law and more. All the key news for your business.
In our previous articles we have discussed some information pertaining to the changes proposed to the VAT Act, namely taxation of lease purchases, remuneration of executive directors, renting of immovable property, place of the chargeable event with electronic services, vouchers, and summarizing invoices.
This is the third and last article from the series focused on the proposed changes to the VAT Act. Here, you can read about the changes regarding the rounding up rule, corrections of the tax base, bad debt, and VAT on repairs of immovable property.
Article 37 section 1 of the Act on value added tax currently states that the tax may be rounded up to the nearest crown. The difference between the original and rounded up numbers is not included in the tax base.
The amendment proposes that this provision should be left out. The aim of this change is to eliminate possible double rounding up (of the amount of tax and of the total payment) and to reach the same amount of tax in calculations both from above and below.
According to the current provisions, the last day when a tax subject can make corrections to realized chargeable events is the last day of the tax period during which the taxpayer’s correction lowers the tax base and the customer receives the corrected invoice. For these cases, the lawmakers decided to simplify this provision and came up with an amendment according to which the correction of the tax base shall itself be considered a chargeable event realized on the day when the operative events for the correction arise. The taxpayer shall still be obliged to issue a correcting invoice if they were obliged to issue an invoice for the original chargeable event, or if this invoice was issued and the customer is sufficiently known to the taxpayer. However, the new amendment includes a proposal that the tax subject should be obliged to make only efforts (even repeatedly) which can reasonably be expected of them, in order for the invoice to become available to the receiver of the chargeable event.
In the area of bad debt the introduced changes should significantly broaden the scope of debt for which it is possible to correct the tax base for reasons of nonpayment of the taxable transaction. Currently, this transaction pertains mainly to debt which the tax subject is owed by debtors who are in insolvency. The amendment proposes that corrections should be allowed by the law in cases where:
The last proposed change we would like to introduce in this article is the alteration of the specific solution for cases of correction of the original right to deduction applied with repairs of immovable property. It is proposed that in cases where the delivered immovable property which has been significantly repaired, the right to deduction of VAT on this repair is subject to a one-time adjustment of the tax deduction (a significant repair means that the amount of received taxable transactions relating to it surpasses CZK 200.00).
Just like with the two preceding articles, we must point out the large scope of this topic. The aim of this article is to provide a short overview of some of the planned changes to the area of value added tax. This miniseries does not include all of the proposed changes or details concerning these topics. Should you have any questions regarding these issues, do not hesitate to contact us.