Starting on 1st July 2021 the new rules of VAT for e-commerce sales beyond the Czech Republic will be placed. On one hand the sellers will be required to adapt to the changes; however, on the other hand this change could decrease their administrative cost and help them to expand their operations in other countries.
The current regulation for shipping of goods with limit for a particular country will be abolished which means that the registration to VAT in every country in which the limit was exceeded will no longer be necessary. However, this amendment of regulation will not bring any changes for the trades within the Czech Republic as such sales will be reported in a well-known tax return as it has been till now.
The new common limit in the amount of 10,000 EUR (256,530 CZK) for a calendar year will be introduced for all the EU countries (i.e. the total of all the sales to the EU countries). In case the limit is exceeded, the VAT will have to be paid in the country of the last customer. If in that nor in the previous year the limit is not exceeded, it will be possible to use the simplified regime and pay the tax from the cross-border transactions in the domestic country (only applicable for small e-shops).
The payment of VAT and other related obligations will be proceeded through the One-Stop-Shop platform. Czech e-shop will communicate only to the Czech tax authority that will subsequently redistribute the VAT paid by the e-shop. This will result in a simplified communication between taxpayers and tax authorities but also in higher requirements for IT systems and for reporting activities. On the other hand, it will enable businesses to expand to other EU countries without the obligation of registration and reduce the tax consultancy cost in those countries.
The concerned companies will be obliged to register to the system beyond the current obligation of VAT registration. At the same time they will be required to prepare accounting/invoicing systems and their outputs so that it was possible to reach the data for preparation of the special VAT return which will be structured differently compared to the current one we are all used to.
The amendment of the tax law is yet to be approved but we do not expect any significant changes.
If you want to be completely sure about the new scheme or need a check-up of the current procedures of your VAT system given the upcoming changes, do not hesitate to contact EK Partners.