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COVID-19 update - Indirect tax, Czech Republic

COVID-19 is disrupting business across the world requiring tax authorities to implement rules and reliefs to support businesses through this period. We are pulling our global indirect tax resources together to create a single source of information, support and thought leadership.

What type of business is this information relevant for?

This information is relevant for all Czech VAT payers.

VAT/GST reliefs – tax authority announcements

The deadlines for submitting returns and the payment of VAT have not changed and the government has not adopted any measures to relieve VAT payments. However, the following options are available:

  • Request a payment deferment or payment in instalments. The taxpayer must prove that the delay in the payment is caused as a result of the extraordinary situation.
  • Request the waiver of interests on late VAT payment citing the. the effects of the extraordinary situation as the reason for the request.
  • Automatic wavier of the CZK 1,000 penalty for failure to submit the VAT control statement if the penalty arose between 1 March 2020 and 31 July 2020. Other VAT control statement penalties amounting to CZK 10,000 - CZK 50,000 are only waived based on a request.
  • Waiver of penalties is not possible for the late submission of VAT returns.

What ideas have you generated to support businesses?

Liquidity and cost reduction

Is e-invoicing available in the Czech Republic?

E-invoicing is possible under the agreement of the recipient of the supplier when using this type of invoicing.

Is bad debt relief available in the Czech Republic?

The general, notion is that the VAT payer should be able to recover output VAT from supplies deemed to be definitely unpaid . Bad debt relief is available only in specific cases e.g. the receivable was subject to an unsuccessful execution procedure for more than two years, or the debtor was liquidated without a legal successor, or the debtor’s inheritance was not enough to cover all debts or the debtor who became insolvent if the bankruptcy has already been declared.

Can businesses claim VAT based on an invoice date or do they also need to pay the supplier first? Can businesses defer accounting for VAT on sales by requesting/receiving payment from customers before they issue an invoice?

Businesses do not need to pay the supplier first in order to claim VAT, provided that the conditions for the entitlement for input VAT deduction have been met (i.e. it is possible to claim input VAT deduction if the supply was effected and the payment has not been performed yet). On the other hand, if a business receives payment from the customer prior to the issuance of an invoice or prior to effecting the supply, the obligation to declare respective VAT arises based on the receipt of the payment. These comments apply mainly to local supplies of goods and services.

Supply and demand shock

If businesses have needed to cancel events can they claim back the VAT charged to participants?

If businesses have had to cancel events, they can claim back the VAT charged to participants via issuance of credit notes which will be declared in their regular VAT returns.

Have there been any changes to the rules concerning non-established taxpayers registered in the Czech Republic?

There have not been any changes to the rules concerning non-established taxpayers in connection to the extraordinary measures.

Call to action

For more information please visit our COVID-19 information Centre HERE.

Contact details:
Kateřina Provodová, Head of Tax
+420 603 418 977
[email protected]

AUTHOR

katerina_provodova - Copy.jpg

Kateřina Provodová
Head of Tax, RSM Czech Republic
E: [email protected]