Czech delays VAT domestic reverse charge

Czech has again postponed the rollout of the VAT domestic reverse charge for all B2B transactions.

The Czech Republic lead the campaign of member states seeking to give the greenlight on the use of the reverse charge on domestic goods. This took over five years, and held up other measures including the harmonisation of VAT on e-books and their printed equivalent.

The measure, which takes out the cash payment of VAT from B2B transactions, had been agreed with the European Commission (‘EC’) as a derogation from the EU VAT Directive in 2019.  The EC had only granted a two-year period for the measure until 2022. It will only apply for transactions at or above €17,500. The measure means the seller does not have to charge or collect VAT on domestic transactions. Instead, the customer reports the transaction in their VAT return twice. VAT reverse charge is already frequently applied on cross-border transactions and some, limited domestic supplies, in VAT-fraud sensitive sectors.

Since the European Commission has only extended the measure for member states until June 2022, including time to evaluate and justify the efficacy of continuing the measure beyond this period, it is likely that Czech Republic may no progress with the measure. In addition, the added strain of the COVID-19 economic crisis may make implementation likely.

You can check the right Czech VAT calculations on individual or batch transactions with our Advisor and Auditor services.

EU VAT General and Domestic Reverse Charge rule by country