CZECH REPUBLIC – Update 25th May
Czech Republic Confirms 10% VAT Rate for E-Books from May 2020
The Czech Ministry of Finance has issued a release regarding the VAT rate for books. The release notes that the VAT rate for books is 10% in the Czech Republic and confirms that this rate has been extended to electronic books with effect from 1 May 2020. As previously reported, the extension of the 10% reduced rate was approved in October 2019 and also applies for electronically supplied newspapers, magazines, periodicals, etc., as well as certain other supplies.
Source Credit – Orbitax
CZECH REPUBLIC – Update 24th April
VAT Exemption on Gratuitous Supplies for COVID-19
The Czech Ministry of Finance has announced a VAT exemption on the gratuitous supply of goods and services made to the Integrated Rescue System, the Army of the Czech Republic, health service providers, and social services facilities for COVID-19. For the purpose of the VAT exemption, supplies made to such institutions are assumed to be for COVID-19 in order to reduce the administrative burden. A general VAT exemption is also provided on gratuitous supplies of good to mitigate the spread of COVID-19, including personal protective equipment, respirators, disinfectants and raw materials for their production.
The VAT exemptions apply retroactively from 12 March 2020 for the entire duration of the emergency.
Source Credit – Orbitax
CZECH REPUBLIC – Update 23rd April
VAT relief for gratuitous medical supplies
The Minister of Finance issued a decision on VAT relief for gratuitous medical supplies. The General Financial Directorate published an overview of situations qualifying for duty free treatment. The CJEU focused on the aspects of rules for exempting collective investment funds management services.
VAT relief for gratuitous medical supplies
Pursuant to a March decision of the Minister of Finance, VAT payers have been released from the VAT duty in respect of gratuitous supplies of selected medical products that have been (or will be) realised during the state of emergency. The Minister of Finance proceeded in line with Section 260 of the Tax Code, applying the tax relief to a broad array of products that, however, have one thing in common: they are necessary for medical needs in relation to combating the coronavirus spread (such as facemasks, gloves, diagnostic test kits, ventilators, etc.). Although we consider the legal regulation of the respective VAT relief rather insufficient, we believe that a failure to pay VAT on the above-specified supplies will be unconditionally tolerated in practice.
In mid-April, the Minister of Finance extended the VAT relief to include any gratuitous supply to selected entities, such as healthcare providers, the fire brigade, Police of the Czech Republic, Armed Forces of the Czech Republic, social service facilities, etc. In this respect, the Minister of Finance once again selected rather questionable VAT relief under Section 260 of the Tax Code.
Information of the General Financial Directorate (GFD)
The GFD published a comprehensive overview of applying duty free treatment, or also VAT exemption if relevant, to imports of goods from third countries. In most situations, this has to involve charitable gratuitous imports; nevertheless, imports in return for payment may also qualify provided that certain conditions have been met.
The Advocate General of the Court of Justice of the EU (CJEU) described the aspects of rules for exempting collective investment funds management services. The Advocate General also examined whether the exemption may also apply to situations where the respective services are simultaneously used for other purposes (management of other funds). He concluded that in such a case, the management services should be fully taxed.
Source Credit – Deloitte
CZECH REPUBLIC – Update 17th April
Currently, there is no postponement for the filing date and deadline for VAT returns. However, if the submission of a return be delayed or payment made late, it is possible to apply for a waiver of penalties that are imposed as long as the business can demonstrate that the delay was due to Covid-19 and its impact on the business.
Source Credit – Accordance VAT
CZECH REPUBLIC – Update 16th April
Delay of submission of Control Reports until 31 July 2020
Tax payers may delay the submission of Control Reports until 31 July 2020. VAT returns and payments must still be processed on time unless the taxpayer can prove substantial issues created by the COVID-19 crisis.
Source Credit – Richard Asquith (Avalara)
CZECH REPUBLIC – Update 10th April
Czech Republic Tax Agency Clarifies VAT Exemption Conditions for Goods Imported Due to Coronavirus
The Czech Financial Administration clarified on 7th April VAT exemption conditions for goods imported due to the coronavirus pandemic. In order to be exempt from VAT the goods must be imported for 1) governmental, charitable or philanthropic organizations; 2) the benefit of disaster victims; 3) assistance in medical treatment, diagnosis, or research; or 4) maintaining international relations.
The exemption applies between 30th January and 31st July 2020.
Source Credit – Bloomberg Tax
CZECH REPUBLIC – Update 9th April
VAT and duty exemption on goods imported to CZ related to SARS-CoV-2 pandemic
The Czech Republic asked the EU Commission to issue VAT and duty exemption decision on goods imported in favour of corona virus victims. Only state institutions or charity organisations will be able to make use of this exemption and if they distribute the goods for free to the pandemic victims (masks) and also rescue units that will use them for their activities (medical equipment).
This measure will not relate to the goods acquired in the EU or purchased in the Czech Republic.
If the EU Commission grants CZ request it will be possible to apply the exemption retroactively.
Source Credit – financnisprava.cz
CZECH REPUBLIC – update 7th April
Possible waiver of penalties
The Ministry of Finance has not extended the deadline for the submission of VAT reports or payment of VAT liability as such. In terms of VAT, the following measures apply:
- A general waiver of the CZK 1,000 penalty for failure to submit a control statement, only if the liability to settle such a penalty arises in the period from 1 March 2020 to 31 July 2020.
- If the VAT payer is able to prove the failure is in any way related to the COVID-19 outbreak (typically an illness or quarantine of accountants or other key employees whose absence made it impossible to fulfil VAT obligations; a substantial drop in revenues due to the outbreak), the following measures apply:
- A waiver of the late payment interest.
- A waiver of the interest connected to the deferral of VAT payment or VAT payment instalment schedule.
- An automatic waiver of the sanction for the late submission of the VAT return if the tax office grants one of the two above waivers as well.
- A waiver of other sanctions for the late submission of the control statement (all sanctions from CZK 10,000 to CZK 50,000). This applies to cases when the appeal is issued within the period of 1 March 2020 to 31 July 2020.
- A general waiver of administrative fees for the filing of the respective requests.
All sanctions can be waived only after the related VAT liability is paid and the respective control statement(s) are submitted.
There is a waiver of VAT payment for the free-of-charge delivery of selected medical supplies to mitigate the effects of the corona virus outbreak. These include, for example, respirators, masks, gloves, face shields, or disinfectants and raw materials for their manufacture. The exact definition of the goods is given in the Financial Bulletin. The waiver covers the period from 12 March 2020 until the end of the state of emergency.
Source Credit – PWC
CZECH REPUBLIC – Update 31st March
- Deadline for corporate income tax return for year 2019 is effectively extended until 1. July 2020 instead of usual 1. April 2020.
- Waiver of the late payment interest; of the interest connected to deferral of VAT payment or VAT payment instalment schedule; automatic waiver of the sanction for late submission of the VAT return if the tax office grants one of the two above waivers as well; and waiver of other sanctions for late submission of the control statement (all sanctions from CZK 10,000 to CZK 50,000). This applies on cases when the appeal is issued within period of 1 March 2020 to 31 July 2020.
- General waiver of administrative fees for filing of the respective requests.
- (All sanctions can be waived only after the related VAT liability is paid and respective control statement(s) submitted.)
- Remission of default interest and interest on the deferred amount in line with the Decree of the General Financial Directorate D-44.
- The obligation to pay advance payments for CIT due by 15 June 2020 is waived (i.e. advanced payments do not have to be paid and the tax authorities will not assess sanctions). This concerns the second advance payment for quarterly payers and first advance payment for semi-annual payers.
- Possibility to apply a tax loss created in 2020 (for a tax return submitted in 2021) retrospectively in the tax returns for 2019 and 2018 (“loss carry back”). This concerns both legal and natural persons. This measure will require an amendment to the Income Tax Act.
Source Link here
CZECH REPUBLIC – Update 25th March
- Waiver of penalties (returns for the 2019 tax period with an original filing deadline of 1st April 2020).
- Businesses with taxable periods other than the calendar year need to apply for a waiver separately.
- Waiver of penalties for late filings of VAT ledger statements.
Source Link here