Distraints and deductions from salaries are not subject to VAT

Employers making deductions from employee salaries on the basis of distraint orders are entitled to the reimbursement of the incurred costs (lump sum). The Coordination Committee of the Czech Chamber of Tax Advisors and the General Financial Directorate made a conclusion that the relevant financial reimbursement is not subject to the value added tax. However, the General Financial Directorate originally stated an opposite approach but eventually stopped enforcing it.

Source Deloitte

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