Czech Republic unable to implement VAT reverse charge mechanism immediately

20-12-2019

The Czech Republic will not be able to immediately apply a generalized reversal of VAT liability for which Brussels has given EU member states approval for a limited period. Czech Prime Minister Andrej Babiš, who fought for the reverse charge mechanism to be made possible for close to five years on the argument that it could save the country billions of crowns in unpaid VAT, said on Thursday the country needed more time to get the respective legislation in place. He said the testing period until 2022 was too short and the country would ask for an extension.

The EU member states have been given the green light to apply 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.