Amendment to the VAT Act from 1 May 2016

Although proposed amendments to several laws connected with the implementation of the new Customs Code are still awaiting their approval by the Parliament, they are expected to become effective as of 1 May, 2016, and to have a considerable impact on the VAT Act. 

One of the changes concerns introduction of extension of the validity of the VAT reverse charge mechanism on domestic supplies of goods delivered by a non-resident to a person/entity registered to VAT in the Czech Republic, which would not apply for suppliers registered as VAT payers in the Czech Republic. Also, new scheme of possible de-registration of suppliers and possibility to issue invoices with other than Czech VAT Number provided all other legal conditions for application of the reverse charge mechanism are met.

The possibility of remission of a penalty or dismissal of imposition thereof for late submission of the Control Statement is yet another significant proposed change. The dismissal of imposition of a penalty of CZK 1,000 could only be made use of once in a calendar year without the obligation to apply for it with the respective tax administrator, which practice will only apply in the cases of late submission of the Control Statement without the respective VAT payer being appealed for rectification by the tax office. However, the remission of a penalty needs to be appealed for no later than three months after the payment assessment imposing the penalty becomes effective.