As we informed you this February (link here), the Ministry of Finance has prepared an extensive amendment to the VAT Act with an expected effect from 1 January 2025 (for some points later, though). On 12 June 2024, the Government approved the draft amendment to the Act and thus moved it to the Chamber of Deputies for its first reading.

Probably the most important upcoming change is the transposition of the EU Directive in the area of the small business regime. Small businesses based in the EU outside the Czech Republic will not be obliged to register for VAT up to a turnover exceeding CZK 2 million per calendar year; a similar rule will apply to Czech companies doing business in other EU Member States.

The above is followed by another relatively fundamental change in the calculation of turnover for VAT registration. The period of 12 consecutive calendar months will be replaced by a calendar year, with these companies becoming taxable only from 1 January of the following year. The exception is when the turnover exceeds the equivalent of EUR 100,000 (CZK 2,536,500), in which case the taxpayer becomes liable on the day after this threshold is crossed. However, the amendment introduces a number of other changes, such as a new rule for determining the place of performance for educational and similar services provided at a distance (online training), as required by the relevant EU directive, and reflects the recent case law of the CJEU in the text of the law. We will discuss the amendment in more detail during the autumn, when we will also be holding a related in-person training session.