Czech Republic


VAT as a part of the real estate acquisition tax base – continued

As presumed in our previous newsletter, the case of the village of Střelské Hoštice continues with a rather nice surprise. This time, however, the surprise came from the tax administration itself. The tax administration published a new press release on 24 November 2011 in which it significantly expanded on its original statement of September 2017. More details here.

When considering the issue of whether value added tax is also part of the real estate acquisition tax base in its decisions of June and August 2017, the Supreme Administrative Courts concluded that VAT should not be included in the VAT base. However, the Supreme Administrative Court only considered cases in which the tax was paid by the transferor. The tax administration responded to the judgment in its press release published on 5 September 2017. Nevertheless, until last week, neither the Court nor the tax administration has provided any statement on the same issue in cases when the real estate acquisition tax is paid by the transferee.

As stated by the tax administration, the real estate acquisition tax will now no longer include VAT – not only in cases where the tax is paid by the transferor (usually the seller) but also in cases where the tax is paid by the transferee (usually the purchaser).

If the real estate was acquired any time after 1 January 2014 and the tax procedure was closed, while the tax was assessed on the tax base including VAT, the taxpayer may file an additional tax return and request a refund of a tax overpayment (if any) provided that the time limit for determining the tax has not expired. This only applies to cases when the VAT is paid by the transferor of the real estate and the acquisition value is the agreed price that includes VAT. If the tax procedure has not been closed, i.e. the tax has not yet been assessed by the tax administrator or an appellate proceeding is pending, the tax administrator itself will assess the tax not including VAT in the tax base. The taxpayer may request a refund of a tax overpayment (if any).

If this topic affects you and you are at a loss as to what to do next, please do not hesitate to contact us.



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