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Major Changes to Czech VAT Requirements

Introduced on Jan 1, VAT-registered persons in the Czech Republic are now required to provide the tax authority with more information on their transactions, as part of efforts to tackle VAT fraud announced in late 2014.

VAT-registered persons need to file a monthly "control message", or "inspection report", to enable the tax agency to monitor their VAT affairs more effectively outside quarterly filing cycle. The report should include information on any transactions undertaken and the counterparty involved.

Self-employed persons will be able to file this report quarterly, and it will be due for all businesses on the 25th day of the month following the tax period. The Czech Ministry of Finance has published guidance on completing the report.

In 2014, an amendment was made to the VAT law to enable the tax administration to request any data that it deems necessary for tax administration purposes. The introduction of the new filing requirement is intended to support enforcement activities against persons involved in missing trader intra-community (MTIC) fraud, also commonly known as carousel fraud. MTIC occurs when VAT is collected on the sale of imported goods to the domestic market inclusive of VAT but the tax collected is never remitted to tax authorities and the seller disappears.

Put in place at the start of 2016, companies are now obliged to electronically file their VAT returns and the inspection reports.

New requirements have also been introduced for businesses to maintain electronic records of sales. Under the first phase, beginning from January 1, the regime now covers companies providing catering and accommodation services; in three months, it will cover retailers and wholesalers; in 15 months, it will cover "other business activities" with the exception of those taxpayers involved in selected crafts and business activities, such as husbandry, transportation, and freelancers, for whom the requirement will be effective in 18 months.

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