New developments in VAT – General Financial Directorate’s notification regarding the new control report introduced with effect from 2016

The General Financial Directorate (“GFD”) published information about the VAT control report that is to be filed by taxpayers with the tax authority from January 2016. The information defines persons that must file the report, the mandatory form of the report, information that must be provided to the tax authority in the report and the period for which the report is filed. All this is to prepare VAT payers in advance for a new important administrative and notification duty, which should be, at least to some extent, taken into account from January 2016. The new obligation is outlined below.

Control report and other documents filed with the tax authority

The control report does not replace the VAT return or the summary report. Nevertheless, it replaces at least the extract from VAT records (declaring domestic reverse-charge supplies). This extract will no longer be required as all relevant information will be presented in the control report.

Who files control reports

Control reports must be filed by VAT payers (Czech and foreign entities and the group defined in Section 5a of the VAT Act) if, in the relevant period:
  • they effect a taxable supply with the place of supply in the Czech Republic, or receive consideration before effecting the supply;
  • they receive a taxable supply with the place of supply in the Czech Republic, or provide consideration before effecting the supply; or
  • they receive supplies which give rise to their obligation to declare VAT under Section 108 (1) (b) and (c) of the VAT Act (such as goods purchased from another EU Member State, a service provided and goods supplied including installation/assembly by a person not established in the Czech Republic);
  • specific transactions are effected under special arrangements for investment gold.

Filing period and deadlines

For legal entities, the filing period is a calendar month. For individuals, the filing period is the same as their tax period; therefore it can be a month or a quarter. The control report must be filed within 25 days of the end of the relevant period (a month or a quarter). Consequently, legal entities may find themselves in a situation where VAT returns are filed quarterly while control reports must be filed monthly. If any discrepancies are identified in the control report, an additional control report must be filed within 5 business days. The control report may only be filed electronically to the address of the tax administrator’s registry office. The GFD’s notification also provides a control report template, preliminary information regarding its completion and legal regulations governing the report. The proposed template form for the control report is available here (in Czech). Please do not hesitate to contact us if you have any questions about potential impacts and risks associated with the control report for your company.