VAT Law amendments, planned to be effective from January 1st, 2017, passed on January 13th, 2017 in Chamber of Deputies the third reading only. As a next step, the proposal must be approved by the Senate (scheduled on March 8th, 2017) and signed by the President; nevertheless, we can expect the effectiveness from April 1st, 2017. Below, we mention the major changes which should be taken into consideration in 2017:
Changes with proposed effectiveness from April 1st, 2017
- Fixed asset acquired via finance lease will be treated as fixed asset of the lessee (user); i.e. the same rules will now apply for both fixed assets acquired via finance leases and fixed assets acquired in a standard manner.
- The obligation to declare VAT in case of a received advance payment will arise only in case that the related supply will be sufficiently specified, i.e. the particular goods or services, the applicable VAT rate and the place of supply are known.
- Under certain circumstances the tax payer will be entitled to claim reduced tax deduction within regular tax return even for periods belonging to another calendar year.
- Taxable supplies provided over a period longer than twelve months should be regarded as effected no later than on the last day of each calendar year following the calendar year in which the provision of supplies commenced.
- The amendment cancels special rules on societies (formerly associations without legal personality) with transitional provision of two years (i.e. till the end of 2018). Thus, from the VAT point of view, each associate will be assessed independently.
- The obligation to adjust (cancel) VAT deduction originally claimed on input will be introduced with respect to unsupported shortages, destruction, loss or theft of asset items. The adjustment shall be made within the period in which the tax payer discovered such circumstances or could discover them.
- The amendment also introduces an extension of application of local reverse-charge mechanism (e.g. in case of provision of personnel for construction and assembly work).
- It also introduces a possibility to consider non VAT payer as “the unreliable person“.
Other VAT news
- Effective from March 1st, 2017, VAT rate on newspapers and books is reduced from 15% to 10%.
- The Financial Administration has amended “The Information of General Financial Directorate clarifying reverse-charge application in case of selected electronic communication services”. The amendment considers purchase and sale of electronic communication to be the service for VAT purposes.
- The Constitutional Court made two changes towards VAT control statement legislation. The changes concern delivery of requests from Financial Authorities to the VAT payers and the way of defining their requirements.
Contact:
Stanislav Železný
Senior Tax Consultant, Accace Czech Republic
