Czech Republic Enforces VAT Deduction Adjustments for Unpaid Liabilities Starting January 2025

• New provision in Czech Republic VAT Act affects VAT payers with unpaid liabilities
• Effective from 1 January 2025, section 74b requires adjustment of VAT deductions for unpaid supplies
• Applies to taxable supplies received from 1 January 2025 with VAT deduction claimed
• Obligation to adjust arises if liability remains unpaid six months after due date
• Adjustment made for tax period in which obligation falls
• Debtor must repay VAT portion related to unpaid supply
• Does not apply to supplies declared by recipient through reverse-charge mechanism
• If liability is settled later, VAT deduction can be reclaimed proportionally
• VAT payers should review and pay overdue liabilities to avoid repayment

Source: bdo.global

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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