Czech Republic: Changes to VAT law proposed for 2019

19 December 2018

A legislative amendment to the value added tax (VAT) law received a second reading in the Chamber of Deputies, and if enacted, the measures could be made effective during 2019.

Among the measures are the following:

  • The proposed definition of persons subject to VAT would remain unchanged (persons whose income is taxed as income from employment will not be explicitly excluded from persons liable to VAT) and thus would not affect statutory representatives of limited liability companies.
  • A supply of goods under a lease would be defined as the handing over of goods for use pursuant to a contract, if the transfer has been agreed and if it is clear at the contracting date that the transfer of the ownership title to the hired goods after the end of the lease term is the only economically reasonable option.
  • A proposed reduction would apply to the standard VAT rate, with the reduction to 20% (or possibly 19%), and the “reduced VAT rate” being 10%.

It is not expected that the amendment would be passed in sufficient time to become effective 1 January 2019, and the budget committee has proposed to delay the effective date to the month following the month the amendment is promulgated in the Collection of Laws.

Read a December 2018 report prepared by the KPMG member firm in the Czech Republic


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