Amendments to the VAT Act approved – adjustments to chain supplies, call-off stock, 10% VAT reduction on selected goods and other changes

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At the end of November 2019, it was announced in Collection of Laws an amendment to Act No. 222/2004 Coll., on value added tax. In this part of the Newsletter, we provide you with a brief overview of the most important changes that were approved in 2019.

In connection with the harmonisation and simplification of some selected taxation rules for trade between member states arising from Directive (EU) No. 2018/1910 of 4 December 2018, amending Directive (EU) No. 2006/112/EC on VAT, the following modifications were approved (i.e. quick fixes):

  • simplification of cross-border goods trade within the so-called call-off stock regime, when, subject to certain conditions, transporting goods to another member state shall not be regarded as the transfer of goods to another member state;
  • determining the place of goods supply with transport, carried out by a so-called intermediary entity, or on behalf of such intermediary entity, in so-called chain supplies within the EU;
  • the supply of goods exemption to another member state will be subject to notifying the goods acquirer‘s VAT ID to the supplier (substantive condition for the application of the exemption), and submission of a EC Sales List with the accurate, true and complete information on the supply of goods to another member state by the supplier for the relevant period.

In addition to amending the taxation of trade between member states, the following changes were also approved:

  • VAT exemption for transactions relating to crude oil and mineral oil listed in Annex No. 9 to the VAT Act, provided that those are delivered to customs warehouses, special warehouses or tax warehouses;
  • new rules for adjustment of deductions from services performed on investment property;
  • new determination of the tax base for the free supply of goods with a cost equal to or less than EUR 1,700;
  • amendment to the provision on the correction of the tax base on the sale of tourism services;
  • extension of the tax reduction to 10% on newspapers, magazines and periodicals, and selected types of food.

All these changes come into force on 1 January 2020.

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