Czech Republic can introduce reverse charge mechanism on VAT

08-11-2019

The EU has given final approval to a proposal that will allow member states that have a problem with carousel tax fraud to apply a generalized reversal of VAT liability.

This is something Czech Prime Minister Andrej Babiš has fought for for four and a half years on the argument that use of reverse charge could save the country around 80 billion crowns lost every year in unpaid VAT.

However Finance Minister Alena Schillerová said on Friday that it will take almost a year to get the respective legislation in place so that the ministry can introduce a generalized reversal of VAT liability in this country.

The EU member states who choose to do so will be able to use the generalized reverse charge mechanism only for domestic supplies of goods and services above a threshold of 17, 500 euros (around 450,000 crowns) per transaction and only up until June 30, 2022, when the outcome of the exemption will be reviewed.