Czech Republic: VAT Rules for Goods Liquidation and Salvaged Outputs

Czech tax authorities clarified that VAT treatment of goods liquidation depends on the actual economic substance of the transaction, not just the contract wording or parties’ intent.
If salvage material has value and that value is reflected in the liquidation fee, the arrangement may involve two supplies: a liquidation service and a separate supply of goods by the owner.
For VAT base purposes, an arm’s-length price must reflect the value of the specific supply at the time it is made; it cannot be changed later by agreement unless objective circumstances affecting value change.
Reverse-charge treatment applies only if the goods objectively meet the legal classification criteria (customs nomenclature and the VAT Act annex); merely deciding to discard or liquidate the items is not enough to make them “waste” or “scrap.”
Under the special scheme for second-hand goods traders, the purchase price of a wreck can be reduced by the average expected scrap proceeds, but any resulting negative value cannot be carried forward to later tax periods.

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.