Proposed change to the entitlement to deduct VAT for payer registration

Within the 2019 tax package, it is proposed to exercise the entitlement to deduct VAT on the received taxable transaction made during a period of 60 months before the date of registration if:

- such a transaction became part of the fixed assets capitalised in a period of 12 consecutive months before the date on which the taxable person became a payer; and

- it is also part of the person’s business assets at such a date.

 

Currently, it applies that if a taxable person has become a payer, such a person is only entitled to tax deduction for received taxable transactions made during the 12-month period before the date of registration, provided that the transaction is part of the business assets at the date of registration.

The proposed amendment also makes it possible to exercise the entitlement to deduction for the business assets which are not part of the business assets at the date of registration if, during the 6-month period before the date of registration, the transaction was received and used to export goods, or for the received transactions made before the date of registration and not included in the business assets for which the entitlement to tax refund was established.

If the registration is cancelled it still applies that the payer is obliged to reduce the exercised entitlement to tax deduction for the assets which are part of the payer’s assets at the date of cancellation of the registration and for which the payer exercised the entitlement to deduction or a part thereof. In 2019, this provision should be extended to low-value assets, i.e. the payer should reduce the entitlement to tax deduction for low-value assets in use for which the entitlement to tax deduction was exercised at least in the amount of CZK 2,100 and which was acquired in a period of 11 calendar months before cancelling the registration.

The 2019 tax package was approved by the Senate at the end of January and is currently again discussed in the Chamber of Deputies.