News 17/2020


We would like to inform you that the Amendment to the VAT Act, implementing quick fixes, came into effect on 1 September 2020. Quick fixes are a set of measures that change the rules for movement of goods between EU member states.

These European rules were supposed to be implemented in the VAT Act with effect from 1 January 2020. National VAT payers thus were able to apply the new principles since the beginning of 2020, due to the direct effect of the European VAT Directive. However, application of quick fixes is mandatory and enforceable by tax authorities since 1 September 2020.

The Amendment to the VAT Act shall apply to:

  • Supplies and purchases of goods in consignment stocks
  • Transport assignment in intra-community chain transactions
  • Tax exemption in supplies of goods to another EU member state
  • Evidence for VAT exemption in supplies of goods to another EU member state

Consignment stocks

The Czech VAT Act contained a simplification for consignment stocks under which suppliers from another EU member state were not obliged to register for VAT in the Czech Republic as VAT was declared by the Czech VAT payer at the moment of transfer of goods to the consignment stock. The collection of goods from the consignment stock itself was not subject to VAT.

By contrast, the new regulation imposes VAT on collection of goods from consignment stocks by customers, while transfer of goods to the consignment stock not being subject to VAT.

The simplified tax regime may be applied if:

  • The seller knows the VAT ID of the purchaser issued by the member state of arrival of the goods at the moment of departure of the goods, with the subsequent supply to be effected on the basis of an agreement between the purchaser and the seller;
  • The purchaser enters the purchaser’s VAT ID issued by the member state of arrival in the special record of transfer of these goods and in the recapitulative statement
  • The right to dispose of the goods as owner passes to the purchaser within 12 months of the arrival of the goods.

The following shall be considered a breach of the terms of the simplified tax regime:

  • Failure to comply with the time limit of 12 months;
  • Sale to another entity that does not meet the requirements;
  • Transport of goods to another member state;
  • Destruction, loss or theft of the goods.

A new annex to the recapitulative statement for reporting transfers of goods to a consignment stock has been introduced in connection with the simplification for consignment stocks.

Chain transactions

The Amendment introduces a clear rule for assigning the transport in chain transactions if arranged by a middle party in the chain.

Under the basic rule, transportation shall be assigned to the supply of goods to the middle party, i.e. the supplier in subsequent supplies of goods in a chain who is not the first-tier supplier, where the goods are transported by this supplier itself or by a third party authorized by this supplier.

However, the above does not apply if the middle party lets the supplier know its VAT ID assigned by the member state of departure of the goods. In such a case, the transport shall be assigned to the supply of goods by the middle party.

Conditions for exempting supplies of goods to another EU member state

Suppliers shall be allowed to exempt supplies of goods to another EU member state only if they correctly show the relevant transaction in the recapitulative statement. Thus, stating the supply in the recapitulative statement shall represent a substantive condition for granting an exemption.

The other conditions remain unchanged:

  • The purchaser gave to the seller its VAT ID;
  • The goods were dispatched or transported from the Czech Republic to another member state by the seller, the purchaser or a third party authorized by the seller or the purchaser.

Proving transport

A payer who claimed an exemption for the supply of goods was already obliged to prove the transport of goods to another member state. However, the choice of evidence was at the payer’s discretion.

Henceforth, means of evidence are strictly determined by the regulation implementing the EU VAT Directive. If the seller arranges for the transport, it shall present two non-contradictory documents issued by independent parties.

However, where the transport is arranged for by the purchaser, the supplier shall be able to provide two non-contradictory documents as well as a written statement of the purchaser containing the prescribed information.

The implementation of quick fixes was intended to simplify the current state. But in our opinion, it often produces uncertainty and doubts. So, please feel free to contact us if you need any assistance!

Your WTS Alfery Team