Selected changes to the VAT Act for 2025
In this article we have focused on the most important changes in the VAT Act for 2025 and we bring you a summary of them.
Calculation of turnover on a calendar year basis § 6
A taxable person is a taxable person on the following day:
- after exceeding the amount of CZK 2 000 000 per calendar year if it has notified the tax administration in a timely filed registration application that it wishes to become a taxpayer as of the 1st day of the following calendar year; or
- after the date on which its domestic turnover exceeds CZK 2 536 500 in the relevant calendar year.
Ex. I exceed the turnover in July 25, I become a taxpayer from 1.1.26 – obligation to register (application within 10 working days after exceeding the turnover § 94) or I can apply for registration immediately. If I decide to wait until 1.1.26, I continue to monitor the second turnover and if I exceed it, I have to apply for registration again and become a taxpayer the day after the date of exceeding the turnover.
Employees – for the supply of immovable property to employees (and their relatives) at a discount, the taxable amount will be the normal price
Claiming a tax deduction – changes to the deadlines
The deduction can be claimed until the end of the second year following the calendar year in which the deduction was claimed § 73
Ex. DUZP 1/25 or 12/25 possibility of deduction until 12/27
Does not apply to transactions under the reverse charge regime – here the right to deduct copies the time limit when we are obligated to pay the VAT. The recipient of the transaction is entitled to deduct the tax at the time when the facts giving rise to the obligation to declare the tax occurred. Since the recipient of the supply is obliged to declare and pay the tax on the date of the taxable supply, he is also entitled to a tax deduction on that date, which he can claim if the conditions of Section 72 are met.
Corrections to the tax base – the time limit for correction is extended to 7 years; however, the time limit will not be interrupted during the period of court proceedings § 74a and § 74b.
The 3-year time limit for correcting the tax base on receipt of an advance/payment where the taxable supply has not yet taken place remains unchanged.
The obligation to carry out the correction even after the cancellation of the taxpayer’s registration is introduced (time limit of 7 years).
Correction of a tax deduction claim after the due date – obligation to correct and reduce the tax deduction if the claim has not been paid within 6 months after the due date § 74b
Deletion of the whole concept of self-created fixed assets
According to transitional provisions, assets created in year 24 and classified in year 25 – old rules (where deduction has arisen). Assets completed in year 25 have new rules.
There are also important changes in § 54 Financial activities
New definition of construction land § 55a – effective from July 1st 2025
For the purposes of value added tax, construction land means land,
- a) on which, on the basis of planning documentation issued by the municipality, the delimitation of the built-up area or a decision of the building authority under the Building Act, a building firmly attached to the ground can be placed; this does not apply if it is clear that such a building cannot be placed on the land or is highly unlikely to be placed on the land; or
- b) on or in the vicinity of which building or similar works have been or are being carried out with a view to the future siting of an earth-fixed structure on that land.
Supply of a “new” building – only the first transfer of completed selected immovable property will be taxable if it occurs within 23 months of completion § 56 – effective from July 1st 2025
While the previous regulation provided for a five-year time test, the new regulation aims at taxing only the first supply of the selected immovable property after its completion.
Services supplied for more than 12 months (§ 21/8)
The amount of the consideration (advance) or the amount of the payments (advances) for the relevant calendar year must be at least 10 % of the total consideration to be received by the taxable person for the taxable supply.
Other changes in the law concern:
- Place of supply for the supply of cultural, artistic, sporting, scientific, educational and entertainment services to a taxable person § 10b
- Place of supply of services in the field of culture, art, sport, science, education and entertainment to a non-taxable person § 10ba
- Actual consumption of B2C services supplied to non-EU persons consumed domestically (taxation e.g. consultancy, legal services) § 10h
- Exemption from tax on supply of leaflets § 71i
If you would like advice on these issues or would like us to deal with these legal obligations for you, please do not hesitate to contact us.