Novela DPH nabývá jasnější obrysy

The VAT amendment is becoming clearer

The extensive amendment to the VAT Act under preparation has advanced to the next stage. An updated version has been published (HERE) and should now be discussed by the government.

Compared to the original version, which we have already informed you about in detail HERE, some interesting changes have been made.

In particular, we would like to highlight the following:

• A significant positive change is that the taxation of discounts granted to employees (and their close persons) will be limited to the supply of immovable property.
• The new obligation of the customer to repay the tax deduction on outstanding liabilities after 6 months remains in the tax bill.
• The shortening of the time limit for claiming VAT deductions also remains unchanged from the original proposal; on the other hand, the time limit for claiming VAT deductions on receipts will be shortened less than in the initial version of the amendment.
• Most of the changes to real estate and construction works are postponed to 1 July 2025. Partial changes are made to, for example, the rules for the taxation of newly built and/or substantially renovated buildings.
• The abolition of the exemption for certain financial services will be postponed until 2026. However, this does not apply to the management of individual portfolios, which will already be subject to VAT from 1 January 2025.
• The definition of medical devices and their accessories for the application of the 12% rate changes again.
• Stricter rules for triangular transactions will be explicitly incorporated in the law.
• The supply of leaflets (non-advertising) will be exempt similarly to books or brochures.
• Expectations that some restrictions of VAT grouping might be relaxed have not been fulfilled.
• The maximum turnover for quarterly filing of VAT returns will be raised to 15 million CZK.
• Despite strong criticism, the reversal of the burden of proof to the taxpayer for guarantee of VAT liability unpaid by suppliers will be maintained.

The amendment has been expanded to almost 450 points accompanied by a comprehensive explanatory memorandum. We are currently analysing the material and the above is only an initial simplified summary of selected areas.

If you have any questions, please contact the authors of the paper or members of the EY team with whom you usually work.

Authors:

David Kužela

Stanislav Kryl