Blog

In January and February 2025, the General Financial Directorate (the “GFD”) published several pieces of Information concerning an amendment to the VAT Act, changes in the field of a registration procedure, VAT registration, and proving of a gift’s provision in connection with a natural disaster. This article brings you a short summary of those pieces of Information.

GFD on Proving a Gift’s Provision in Connection with a Natural Disaster

The Income Tax Act enables deducting a gift from the tax base where defined conditions are met (Section 15 (1) and Section 20 (8) of the Income Tax Act). By default, compliance with those conditions has to be confirmed by the gift’s recipient, but other evidence can also be used (such as a bank statement, a postal order receipt and printed information about the gift’s recipient and purpose). Another way of proving compliance with the conditions can primarily be applied in cases where a financial gift was provided to selected published accounts in public collections opened in compliance with the Act on Public Collections and entered in the Public Collection Central Register of the Interior Ministry of the Czech Republic.

A list of those accounts with the possibility of simplified proving of a gift’s provision in connection with a natural disaster (the floods that hit the Czech Republic in autumn 2024) is provided in the Information’s attachment. If a financial gift was made to an account, standard evidence needs to be available (a confirmation from the gift’s recipient containing the recipient’s identification, the gift’s subject matter, purpose and value, as well as the date of provision).

GFD on an Amendment to the VAT Act Effective Since 1 January 2025

An amendment to the VAT Act effective since 1 January 2025 brought a number of significant changes in the VAT field, which we have previously informed you about. To a large extent those changes resulted from amendments to European legislation, some of them reflecting on the decision-making practices of the Court of Justice of the EU, and others respond to the application practice. Major new aspects include introduction of a cross-border regime for small-sized enterprises, changes in the area of mandatory payments, implications for the construction industry, or corrections of the tax base and application of tax deductions.

Due to the scope and significance of those changes, the GFD prepared Information, which sums up major updates from both the theoretical and practical point of view. As mentioned in the Information’s opening, the summary is not intended to be exhaustive. Additional or more detailed pieces of information should be included in separate pieces of Information, which are to be published on particular topics one by one.

The GFD’s Information can be found here.

GFD on Changes in VAT Payments and VAT Registration Procedure since 1 January 2025

Key updates concerning the amendment to the VAT Act include changes in the field of VAT payments and an associated registration duty. Newly, the level of turnover is being monitored on a calendar year basis. While the original threshold for the mandatory registration at CZK 2,000,000 remains unchanged, a threshold in the amount of CZK 2,536,500 has now to be also kept track of. Where those thresholds are exceeded, it has an impact on the moment when a taxpayer becomes a VAT payer.

If the original threshold is exceeded, a taxpayer becomes a VAT payer from 1 January of the following calendar year provided however that the taxpayer does not exceed the new threshold at CZK 2,536,500. If that higher threshold is exceeded, the taxpayer becomes a VAT payer as soon as from the following day.

In addition to this, the amendment resulted in changes in the deadline for the filing of an application, which is now 10 business days from the turnover being exceeded. A special attention has to be paid to a situation where a VAT registration had been cancelled due to termination of economic operation, but a taxable supply was subsequently made. Where the taxpayer complies with the conditions defined by the law, the taxpayer becomes a VAT payer as soon as from the date of providing such supply (irrespective of the level thereof).

The Information contains many real-life examples, an emphasis being placed on the connection with the law’s original provision, giving a due respect to a number of transitory provisions. We recommend paying proper attention to those changes and are ready to assist you in the event of any uncertainties.

Michaela Kozminská
kozminska@clarksonhyde.cz