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Czech Republic: Tax administration clarifies VAT amendments

Czech Republic: VAT amendments

The General Financial Directorate (GFD) in the Czech Republic issued clarifications concerning the following value added tax (VAT) legislative amendments (effective 1 April 2019).

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Correction of tax base for unrecoverable debts

The GFD guidance clarifies that if a creditor’s receivable arose before the amendment’s effective date of 1 April 2019, but related insolvency proceedings began after the effective date, it will be necessary to proceed in accordance with the new measures.

Further, the guidance:

  • Allows for the correction of the tax base for receivables included in the approved reorganisation plan, which was not possible under the original wording of the law
  • Includes rules for reporting of corrections in the creditors’ VAT returns and VAT ledger statements
  • Summarises the conclusions of the Court of Justice of the European Union (CJEU)—if both the creditor and the debtor were VAT payers at the time of a taxable supply, but the debtor ceased to be a VAT payer between the date of the supply and the date for a correction to the tax base for an unrecoverable debt, the creditor has the right to make a correction

Read a January 2020 report prepared by the KPMG member firm in the Czech Republic

VAT on heating, cooling

An amendment to the VAT law (1 April 2019) reduced the VAT rate for the supply of heating and cooling supplies to 10% effective for supplies after 1 January 2020.  The GFD guidance:

  • Addresses what is the date of supply as being either as the date a measurement device is read or the date the actual consumption is determined (if it cannot be determined otherwise)
  • Clarifies that hot water supplies after 1 January 2020 remain subject to the first reduced VAT rate (15%), since such supplies are considered one delivery (i.e., hot water is mentioned in an appendix to the VAT law listing goods subject to the first reduced VAT rate)

Read a January 2020 report prepared by the KPMG member firm in the Czech Republic

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