Czech Republic

Czech Republic: Reverse change mechanism to come into force on January 1 2020.

On 21 June 2019, the European Commission issued a proposal for a Council implementing the decision that authorised the Czech Republic to apply for the generalised reverse charge mechanism on all domestic transactions above €17,500 (CZK 450,000).

If this measure is approved by the European Council, the new reverse charge mechanism scheme will come into effect from 1 January 2020 for two and a half years.

The reverse charge mechanism will withdraw the VAT cash payment from a transaction in an effort to eliminate any opportunity for fraud. This will mean the seller will not charge VAT, instead, the purchasers will report the sale through their own VAT return without any cash payment (reverse charge).

This new mechanism is aimed at helping to fight trader fraud in the Czech Republic.

We are keeping a close eye on this story and the European Council response. We will keep you updated on any updates that occur. To make sure you don’t miss out, subscribe to our monthly VAT Guide below.

Get our Monthly VAT Guide straight to your inbox.