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Czech Republic: Transposition of rules for VAT quick fixes, intra-Community supply of goods

Czech Republic: Transposition of rules, VAT quick fixes

An amendment to the Czech Republic’s value added tax (VAT) law implements long-awaited changes to the intra-Community supply of goods (“quick fixes”).

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The effective date is 1 September 2020.


Practical implications of quick fixes

  • Proving the transport of goods to another EU Member State: In accordance with the relevant provision, it is sufficient to submit a required combination of documents issued by at least two different parties that are independent from each other and from the vendor and the acquirer. The term ‘independent’ has now been clarified to mean that the parties are independent if they are not related to one another through capital or in any other manner. When the relationship through capital is concerned, an independent party must be a party that holds a less-than-40% share in the registered capital or voting rights of another party.
  • Conditions for VAT exemption of intra-Community supplies of goods: Some believe that to be able to claim a VAT exemption, the transactions must appear on the “EC Sales Lists” for the period in which the transactions were conducted (that is, the period to which they relate under the VAT law). This interpretation, however, is in conflict a provision of the VAT law allowing the reporting of transactions in tax periods other than the period to which they relate. The tax administration has not issued guidance on this matter.
  • Minor and natural losses in consignment (call-off) warehouses: The original explanatory note on consignment warehouses states that when goods are destroyed, lost or disposed of, the taxpayer ceases to meet the conditions for applying the simplification for call-off stock arrangements, and instead, there is a duty to register for VAT. In response, the EU Member States filed a joint motion to introduce a tolerance limit of 5% for these minor losses.

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

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