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News 6/2019

Start of the last stage of electronic sales registration (EET) and reduction of VAT on certain supplies

President Zeman has signed a government amendment of the Act on Electronic Registration of Sales, extending the areas to which EET applies. The third and fourth stages of EET will commence on 1 May 2020.

What we already know from the previous EET stages:

  • Natural persons (entrepreneurs) who became liable to register their sales can claim a one-time personal income tax credit of up to CZK 5000.
  • In the event of temporary connection failures, sales receipt sent within 48 hours will be taken into consideration for registration purposes in addition to the usual on-line registration of sales.
  • A simplified off-line registration scheme will be permitted upon request if the usual registration method is objectively impossible on a long-term basis.

What is new:

  • The third and fourth stages of EET give small businesses the option of using a paper form of EET. This special scheme will apply to traders who are not VAT payers with cash income of up to CZK 600,000 p.a. and a maximum of 2 employees. Thus small businesses are free to choose either to register their sales on-line or to use the newly introduced paper form of registration. If they choose the paper format, they have to send the tax office a form with information on the amount of sales and the number of issued and cancelled tax documents on a quarterly basis. Paper sales notes issued by the tax office free of charge will serve as proofs of sale for customers.
  • In principle, the last stage of EET will include all other businesses that were not subject to the registration obligation in the first and second stages.
  • In particular, the liberal professions, carriers, farmers and certain ‘production and craft’ professions are covered by the third stage. The fourth stage includes selected areas of ‘craft and production’.

Along with the government amendment to the EET Act, some supplies have been re-classified in the reduced VAT rate of 10%. These include the following goods and services:

  • Sale of Christmas carp from 18 to 24 December, social services, prepaid telecommunication cards, gambling, commercial air transport and blind taxpayers have been granted an automatic exemption from EET.
  • Home care of children, the elderly and the disabled ,
  • Catering services and serving beverages, including draught beer,
  • Water and sewer rates,
  • Interior cleaning services and window cleaning services in households,
  • Shoes and leather goods repair,
  • Repair and alteration of garments and textile goods,
  • Bicycle repair,
  • Hairdressers’ and barbers’ services,
  • Lending or renting books,
  • Drinking water supplied to customers through pipelines under the Act on Water Mains and Sewers,
  • Books, e-books and audiobooks.

Reduction of VAT on the above goods and services will apply from the same date as the start of the last stage of electronic registration of sales, i.e. from 1 May 2020.