Czech Republic: Application for a general reverse-charge mechanism

The Czech Republic has recently submitted a request to the European Commission for the option to use the general reverse-charge mechanism. This scheme would be applicable to all taxable supply of goods and services exceeding €17,500 (CZK 450,000).

After approval by the European Council, the corresponding legislative process will be launched in the Czech Republic. The amendment is expected to enter into force on 1 July 2020. The effort to implement a general reverse-charge mechanism stems from the goal of preventing VAT carousel fraud. The Czech Republic is already using reverse charge in all sectors in which existing EU legislation permits its use. The general reverse-charge mechanism, together with control reporting and electronic sales records (“EET”), would be the main pillars of tax reforms aiming to reduce the gap between expected and collected VAT