News in the field of value added tax
Even though there are only two months to the beginning of the year 2013, it is not clear yet what will be the VAT rates valid from 1 January 2013 in the Czech Republic. Currently there are four options under consideration: (i) 15% reduced VAT rate and 21% basic VAT rate, (ii) 15% reduced VAT rate and 20% basic VAT rate, (iii) currently valid VAT rates, i.e. 14% reduced VAT rate and 20% basic VAT rate or (iv) currently approved uniform VAT rate of 17.5% that should be effective as of 1 January 2013.
Except for the changes in the VAT rates, there is also technical amendment of the Act on Value Added Tax in the legislative process. The aim of this technical amendment is to ensure harmonization of the Czech VAT legislation with the European Union regulations. Therefore, it is assumed that the technical amendment will be approved soon. Majority of the proposed technical amendments should become effective from 1 January 2013. The fate of the technical amendment was, however, complicated on 25 October 2012 when Senate did not approve it and returned it back to the Chamber of Deputies with an amendment covering tax rates (maintaining tax rates of 14% and 20% was proposed). As a result, at present it is not possible to say with certainty, whether the following changes will happen to be effective from 1 January 2013.
The technical amendment brings above all the following changes:
- changes in billing rules, issuance and storage of VAT documents, equalization of documents in paper and electronic form
- changes in the definition of the seat of the taxable person, VAT establishment of a supplier and recipient of supply, use of exchange rates for conversion of foreign currency
- changes in the definition of taxpayers and tax identified persons and related changes in the VAT registration process and payership
- changes in the VAT treatment of real estates (introducing an option for a taxpayer to apply output VAT for the transfer of real estates even after the statutory deadline and extension of the deadline from three to five years)
- changes in determining the place of supply for long-term lease of means of transport to non-taxable persons (place of supply determined by the seat or place of residence of the recipient of the supply)
- in combating the tax evasion the concept of so-called unreliable payer, the obligation to notify the tax administrator of taxpayers’ bank account used for economic activity and the related extended liability of the recipient of the supply for unpaid tax should be introduced
- changes covering administration of taxes (modification of taxable period, extension of the mandatory data to be included in the evidence for tax purposes, from 1 January 2014 obligation to submit tax return electronically, except for clearly defined cases)
- efforts to ensure greater legal certainty within the application of the reverse charge regime in case of provision of construction and assembly works
We will further inform you on the tax rates approved for 2013 and further development of the technical amendment in the legislative process.
If you are interested in getting more detailed information on the proposed changes not only in the field of the Value Added Tax Act, you are very welcome to come to the breakfast organized by Accace on the premises of City Tower on Pankrác, 1716/2b Hvězdova street on 14 December 2012.