Czech Republic: Amendment allows allocation of VAT reverse charge mechanism

Czech Republic: VAT reverse charge mechanism

With respect to the value added tax (VAT) rules, there is a new provision that allows buyers and sellers to agree to an allocation of the reverse charge mechanism, without regard to the value of the goods. This amendment is effective beginning 1 February 2016.

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Previously, it was possible to apply the reverse charge mechanism only if the value of the goods or supplies did not exceed a threshold amount (CZK 100,000). The new measure no longer imposes this limit, provided that the agreement is in writing.

The amended measure also extends application of the reverse charge mechanism to deliveries of electricity and gas when the purchasers are traders of electricity or gas. For these purposes, a “trader” is not only persons purchasing electricity or gas primarily for re-sale (and whose own consumption of electricity or gas is immaterial), but also any other person whose principal activities are electricity transmission and distribution.

 

Read a February 2016 report [PDF 507 KB] prepared by the KPMG member firm in the Czech Republic

 

Other items discussed in this report concern:

  • A decision of the Supreme Administrative Court in a VAT case, allowing a taxpayer to claim a VAT deduction on a supply from a supplier whose VAT registration had been cancelled for failure to satisfy tax liabilities 
  • An income tax treaty between the Czech Republic and Lichtenstein has entered into force and is effective January 2016
  • New customs measures, intended to harmonize with EU law
  • A Supreme Court decision on commercial register entries

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