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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

Country General RC (art 194) Domestic Reverse Charge (art 199)
Domestic goods * Immoveable Property Installation Construction Scrap metal Mobile Phones Gas & electrcity Carbon Trading
Austria Yes Yes Yes Yes Yes Yes Yes Yes
Belgium Yes Yes Yes Yes - - Yes Yes
Bulgaria - - Yes - Yes - Yes -
Croatia Yes Yes Yes Yes Yes - Yes Yes
Cyprus - - Yes Yes Yes Yes Yes -
Czech Republic Yes - Yes Yes Yes Yes Yes Yes
Denmark - - Yes - Yes Yes Yes Yes
Estonia Yes Yes Yes - Yes - Yes -
Finland Yes - Yes Yes Yes - Yes Yes
France Yes - Yes Yes Yes - Yes Yes
Germany - Yes Yes Yes Yes Yes Yes Yes
Greece Yes - - - Yes Yes Yes Yes
Hungary  - Yes Yes Yes Yes - Yes Yes
Ireland - Yes Yes Yes Yes - Yes Yes
Italy Yes Yes Yes Yes Yes Yes Yes Yes
Latvia - - Yes Yes Yes Yes Yes -
Lithuania Yes - Yes Yes Yes - Yes -
Luxembourg - - - - - - Yes Yes
Malta Yes - Yes Yes - - Yes -
Netherlands Yes Yes Yes Yes Yes Yes Yes Yes
Poland Yes - Yes Yes - - Yes -
Portugal Yes Yes Yes Yes Yes - Yes Yes
Romania Yes Yes Yes - Yes Yes Yes Yes
Slovakia Yes Yes Yes Yes Yes Yes Yes Yes
Slovenia Yes Yes Yes Yes Yes - Yes Yes
Spain Yes Yes Yes Yes Yes Yes Yes Yes
Sweden  Yes - Yes Yes Yes Yes Yes Yes
Non-EU
Norway - - - - - - - -
Switzerland Yes - Yes - - - Yes -
UK - - Yes - - Yes Yes Yes
* Further local rules on the VAT status of the supplier and their customer need to be considered to determine if RC applies

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