VAT Remission for Gas and Electricity Supply
In connection with the Decision on VAT Remission for Gas and Electricity Supply based on the decision of the Czech Ministry of Finance published in the Financial Bulletin No. 34/2021 (hereinafter “Decision”), we would like to inform you about the related issues that may affect your enterprise in this context. This Decision affects not only energy suppliers but also property owners who re-invoice their tenants for energy supply, and the tenants themselves, both natural and legal entities.
Which transactions are affected by this remission?The Decision offers universal remission (“cancellation”) of VAT on the supply of electricity and gas for payments made between 1 November and 31 December 2021, regardless of whether the customer is a VAT payer / taxable person or not. The Czech Ministry of Finance (“MF”) specified in the related communication (https://www.financnisprava.cz/assets/cs/prilohy/d-seznam-dani/70709-INFORMACE_GFR_k_vyuctovani_elektriny_a_plynu_CISTOPIS.pdf in Czech) that the remission applies to electricity and gas used for heating regardless of the method of consumption, as well as gas for driving motor vehicles.
Which transactions fall within the remission period?The main criterion here is the date of the taxable supply. Primarily, it is the date of:
- reading the measuring equipment;
- determining actual consumption;
- receiving the advance payment.
How is the remission reported on a tax form?Under the MF’s decision, a supplier will declare transactions that meet the remission conditions on line 26. If reverse charge mode is applied, the supplier will indicate the transactions on line 25 and the customer on line 26 of the tax return. These transactions will not be reported in the VAT control statement. Regarding the above, we would like to draw your attention to certain questions which may arise while completing the related tax returns (i.e. for November and December 2021, or the tax return for the month in which these periods are settled).
- Is it possible not to apply the remission upon agreement between the supplier and customer?
- Is it necessary to adjust payment schedules?
- How should one deal with payment schedules issued between 1 November and 31 December 2021?
- How does the remission affect the calculation of the VAT coefficient?
- How does the remission impact energy readings taken monthly with annual billing?
- How does one correctly re-invoice energy supply to one’s tenants?
- Is it possible to pay higher advance payments in the defined period and save VAT?