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News 8/2021

Waiver of VAT for Supplies of Electricity and Natural Gas in November and December 2021

We would like to inform you that the Ministry of Finance of the Czech Republic has decided on an extraordinary waiver of VAT for supplies of electricity and gas in the period from 1 November to 31 December 2021.

The decision concerns all supplies of electricity and gas, i.e. not only to households (B2C), but also to businesses (B2B).

The VAT waiver therefore applies to all suppliers of electricity or gas where there is a duty to report tax on taxable supplies realised or on taxable supplies received in November or December 2021.

If, in the case of the supply of electricity and gas, consideration is accepted before the date of taxable supplies and the payer is obligated to report tax on this in accordance with Section 20a(2) of the Value Added Tax Act, then tax is waived on the amount of such consideration received, if the advance is received in November or December 2021.

In accordance with the principles of value added tax, there is a waiver for output tax calculated from a tax base in accordance with Section 36, Section 36a or Section 37a of the Value Added Tax Act, i.e. including additional expenses related to the delivery of such goods, which are included in the tax base (typically services related to the distribution of natural gas or electricity).

The waiver applies to imports of gas and the acquisition of gas from another Member State that is not supplied by networks or systems (e.g. a tanker).

 

Immediately after the publication of the decision on VAT waiver, the General Financial Directorate published information about how precisely to proceed when issuing tax documents, reporting on a VAT return and control statement and making the related claim to a VAT deduction. Below we select a few rules for you:

  • In the case of supplies of electricity or gas, the payer is obligated to issue a tax document without stating the tax rate and the tax amount, or stating a tax rate of 0% and a tax amount of 0.
  • If, however, a payer states output tax that is waived on a tax document issued after 1 November 2021, it is obligated to report such tax, where the recipient can claim an entitlement to a tax deduction.
  • In the event of the application of the reverse charge regime, the provider of performance proceeds in the standard manner when issuing tax documents.
  • The provider reports the relevant performance on row 26 of a tax return, in the value of the tax base, and this applies to a recipient of performance in the event of the application of the reverse charge regime.
  • In a control statement, information about supplies where tax was waived is not stated.
  • Under the conditions stipulated by the VAT Act, a payer is entitled to deduct tax on taxable supplies received that it used or uses for the purposes of supplying electricity or gas where tax is waived.

The aforementioned VAT waiver should be followed, from 1 January 2022, by an amendment to the VAT Act that extends the zero VAT rate for the whole of 2022.

Change to Average Price of Petrol for Purposes of Reimbursement of Travel Expenses

As of 1 January every year, the Ministry of Labour and Social Affairs publishes a decree containing the amount of the basic reimbursement rate for using road motor vehicles, meal allowances during domestic business trips and the average price of fuel.

The ministry can make an extraordinary alteration, if, according to information from the Czech Statistical Office, one of the aforementioned values rises or falls by at least 20% compared to the amount set in the most recent provisions.

This situation has occurred concerning petrol. The average price for 1 litre of 95 octane petrol was therefore increased by a decree from the original CZK 27.80 to the new CZK 33.80. The average prices of other fuels, including electricity, remain unchanged. The change is effective as of 19 October 2021.

If, with regard to economic trends, there is an increase in the price of other reimbursements by more than 20%, we could encounter other extraordinary alterations to reimbursements by the end of 2021. We are therefore monitoring the situation.

If you are affected by the aforementioned changes, please do not hesitate to contact us.

Your WTS Alfery team