There were a lot of changes in the VAT area in CZ in 2020. Many of them were related to the VAT rate changes.
Just to be reminded, there are three VAT rates in place currently in CZ, standard 21% rate, and reduced rates of 15% and 10%.
From 1 January 2020 VAT rates on heat and cold were reduced from 15% to 10%.
Also, the leasing definition as a supply of goods was amended. Until 1 January 2020 leasing was considered as the delivery of goods when the obligation to purchase the object of leasing at the end of the leasing contract was stipulated. From 1 January 2020 conclusions of the C-146/16 Mercedes-Benz Financial Services UK were adopted and leasing is considered to be a supply of goods from its beginning when the only economically relevant alternative of the leasing termination is the purchase of the leased object.
From 1 May 2020, the rate of 10% instead of 15% applies to water and sewer rates, drinking water from the water pipeline, catering services including draft beer, among others.
From 1 July 2020 in relation to covid, accommodation services, entrance to concerts, theaters, sports events, fitness, etc., were transferred from the 15% to 10% VAT rate.
On 1 September 2020 quick fixes rules were at last implemented in the Czech VAT act.
Also, the simplification of conditions for VAT exemption on export was approved. It is no longer necessary that the goods are released for a certain customs procedure, but the goods have to leave the EU. Formerly customs declaration was necessary as evidence of export. Now also other evidence is permitted.
Contribution by Ondrej Stedry
Tax Adviser
Prague
Czech Republic
