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An amendment to the Value Added Tax Act is currently going through the legislative process. This amendment reflects Council Directive 2020/284 dated 18 February 2020 amending Directive 2006/112/EC (hereinafter the “Council Directive”), and Council Regulation 2020/283 dated 18 February 2020 amending Regulation 904/2010 (hereinafter the “Council Regulation”). The amendment deals with collecting and providing data on payments for the purpose of improving the combat with VAT fraud in e-commerce.

The amendment will be discussed on the 63rd meeting of the Chamber of Deputies (Parliamentary Print No. 385) and is anticipated to become effective as of 1 January 2024.

The measures respond to the growth in electronic cross-border sale of goods and services to end customers in the EU Member States, the purpose being enhanced efficiency of combating VAT fraud in cross-border e-commerce.

Council Regulation

Changes in the Regulation primarily focus on developing a central electronic system of payment information, i.e. the “CESOP”. This system is intended to store and analyse certain information, provide it to contact officers, and aggregate it by individual recipients. The information will be entered in the system by individual member states with reference to documentation from payment service providers.

Council Directive

The Council Directive brings details about individual entities’ duties. A duty to keep a register and to provide information will apply to payment service providers who render payment services in the EU, i.e. all providers in the territory of the Czech Republic.

Under the definition, providers will include persons authorised to render a registered payment service (in compliance with the law regulating the payment system, the Czech National Bank being an exception). As a result, the duties will primarily apply to credit institutions, postal giro institutions, e-money institutions and other payment institutions.

The payment service means a cash-free transfer of finance from both one’s own and other person’s resources in the form of payments with credit cards, standing orders or direct debits.

A provider (such as a bank) will be obliged to keep a register of cross-border payments and recipients thereof if more than 25 payments are executed for the same recipient in a single calendar quarter. The information kept in the register will include BIC, the name/company name of the recipient, tax ID, IBAN or a similar identificator, as well as the recipient’s state of establishment, address, etc.

All these pieces of information have already been available to payment service providers. What is new is primarily such data’s processing, registering and providing to other competent entities (CESOP). Providers will be obliged to store the above-mentioned data for a period of three years from the end of a calendar year, in which the payment was made. A notification of the performed payments will be delivered electronically via the information system of the Financial Administration of the Czech Republic.  

The amendment’s final version may be modified due to the pending legislative process and we are therefore carefully monitoring the legislative process for you and will keep you posted about any developments.

If you need more information about this matter, please feel free to contact us.

Michaela Kozminská                                       Lenka Kolmanová
kozminska@edmutilitas.cz                              kolmanova@edmutilitas.cz