Share with your friends

Czech Republic: VAT changes proposed for 2020

Czech Republic: VAT changes proposed for 2020

A draft amendment to the value added tax (VAT) law for 2020 would introduce changes with respect to consignment stock arrangements and intra-community transactions with goods. The proposals are aimed at harmonizing the rules for the delivery of goods among the EU Member States.


Related content

The changes would be effective as early as January 2020.

Change to VAT regime applicable to consignment stock arrangements

The transfer of goods to a warehouse in another EU Member State for the purpose of a subsequent sale to a local customer generally requires the registration (or identification) for VAT in the country where the sale is made. To reduce the administrative burden, it is currently possible to use simplification procedures such as “call-off” (consignment) stock arrangements, generally to avoid the redundant registration or identification for VAT of a European supplier in the country of the ultimate sale. However, the rules for these simplification procedures vary materially in individual EU Member States. One of the quick fix measures therefore aims to unify and simplify the procedures in these particular cases.

At present, the consignment stock regime in the Czech Republic functions as follows:

  • The transfer of goods from another EU Member State to the Czech Republic can be regarded as the acquisition of goods by a particular supplier already at the date of transfer.
  • The customer then self-assesses the acquisition of goods as early as goods are received into stock.  

Beginning 1 January 2020, the entire system of taxing consignment stock arrangements would completely change. According to the draft amendment, the customer would neither pay VAT nor declare the acquisition of goods from another EU Member State earlier than at the moment when the goods are actually withdrawn from stock. In connection with this, a new time limit over which goods could be stored would be set at 12 calendar months within which goods would have to be dispatched from the warehouse and taxed. The duty to monitor the time over which goods are stored would represent a significant administrative change to stock records. Another condition would be that goods stored may not be lost or destroyed, since this could be classified as a violation of conditions for the application of simplification procedures. There is a question as to whether shortages within the limit or substantiated thefts and losses that are being recovered in due manner from responsible persons would be allowed. 

Conditions for VAT exemption of supply to another EU Member State

According to the draft amendment, in all EU Member States, an exemption from VAT on the delivery of goods to another EU Member State would only be applicable to sales to customers registered for VAT in that particular country. This condition would have to be duly verified. Under existing case law of the Court of Justice of the European Union, this condition has so far only been a formal one. However, effective 2020, it would be a substantive condition—that is, one that would be essential for claiming a VAT exemption. 

Read a May 2019 report prepared by the KPMG member firm in the Czech Republic

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today