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Tax Flash

Tax Flash is an electronic newsletter prepared by PricewaterhouseCoopers Česká republika, s.r.o. to keep you up to date on the latest tax and legal news. A more complex look at key tax changes and their impact on your business is provided in our monthly newsletter, Tax & Business News.

New VAT return form in the Czech Republic

From 1 January 2009 a new VAT return form starts to apply in the Czech Republic. Although it will have a different layout and fewer fields; because some fields on the current VAT return will be merged, it cannot be said that the return has been simplified. Filling in the new VAT return form (form Nr.25 5401 MFin 5401) will require more detailed breakdown of transactions.

The new form will have to be used for the first time by monthly VAT payers for submitting January 2009 VAT returns which should be filed by 25 February 2009 and by quarterly taxpayers for submitting first calendar quarter 2009 VAT returns which should be filed by 27 April 2009. However, VAT returns submitted on 26 January 2009 for December 2008 and fourth quarter 2008 VAT periods will still be completed on the current VAT return forms.

The new form will have two pages. On the first page there will be fields for basic information about the VAT payer. The second page will include data necessary to calculate the VAT liability or refund of VAT. The new fields will be numbered from 1 to 67.

As mentioned above, some fields on the current VAT return form will be merged into one field on the new one. Fields 210 and 240 will be merged into field 1, fields 215 and 245 into field 2, fields 320, 330, 340 and 350, etc. into field 44, fields 410 and 420 into field 20 etc. Unfortunately, other fields of the current VAT return form will be on the contrary newly assigned to two different fields on the new VAT return form. This is unfortunate as this will rather increase the VAT compliance burden than decrease it. For example, current field 230 will be assigned to new fields 5 or 11, current field 235 to new fields 6 or 12 and current field 250 to new fields 3 or 4, etc. For affected transactions, the VAT payer will have to determine what type of reverse charge service is being received and from whom. The import VAT assessed by the Customs Authorities will be reported separately from the import VAT calculated on the reverse charge principle by the VAT payer. The VAT payer will have to determine which part of VAT return fall on the purchased property. Please note that above we provide only an indicative list of changes and we strongly recommend that each VAT payer reviews his current VAT accounting and compares it with the new requirements.

Companies that have set up their ERP systems so that they automatically generate VAT returns need to consider amendments to VAT coding so that ERP systems can complete VAT returns automatically from the beginning of January 2009. In our opinion, the number of changes necessary to systems may be significant. Similarly we recommend that the existing structure of tax codes is revised.

The new form is unfortunately available only in the Czech language at the moment.

Download the file bellow for more.

www.pwc.cz