Czech Republic: VAT changes enacted, reverse-charge mechanism available

Czech Republic: VAT changes enacted

New value added tax (VAT) law in the Czech Republic, published in the Collection of Laws and generally effective 29 July 2016 (with a few exceptions, the effective dates are 1 August and 1 September), includes changes with respect to application of the reverse-charge mechanism to the delivery of goods by persons not established in the Czech Republic and the reduction of sanctions associated with VAT ledger statements.

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The amendment to the VAT law allows for the application of the reverse-charge mechanism to the delivery of goods in the Czech Republic by an entity that is not established in the Czech Republic nor registered as a Czech VAT payer, if the customer is a VAT payer. Entities not established in the Czech Republic, therefore, are no longer required to register for VAT for this kind of transaction. In addition, these entities will be allowed to apply for the cancellation of their registration within six months of the amendment’s effective date if their obligation to register for VAT originated before the amendment’s effective date and if they only deliver goods to VAT payers in the Czech Republic. 

The amendment also introduces a change in the local jurisdiction of the tax authority dealing with entities not established in the Czech Republic, which will be taken over by the Moravian-Silesian Tax Authority from 1 September 2016.

The changes also reduce sanctions associated with VAT ledger statements, and repeal an exemption from VAT regarding the delivery of goods in free zones or free warehouses and defines in more detail the six-month deadline for adjusting the amount of tax applicable to receivables from debtors subject to insolvency proceedings.


Read an August 2016 report [PDF 575 KB] prepared by the KPMG member firm in the Czech Republic

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