Mazars Tax Alert - November 2020

Dear business partners,
 
The end of the year is coming and the time has come to remind you of the significant change in the area of VAT that could affect a wide range of leases. As a result of the adoption of Act No. 80/2019 Coll. (hereinafter referred to as the “VAT Act”), effective from 1 January 2021, the often-used option of taxing the leasing of real estate to another VAT payer will be restricted.
 
This change could have a significant impact on any deductions applied for leased properties and their technical improvements for several businessmen. If this issue applies to you, we recommend you learn more not only about the practical consequences specified in the amendment to the VAT Act but also with the existing interpretation disputes and also to think about how to avoid the negative impacts of these changes.
 
We point out the fact that in recent months some other area concerning leases has come to the forefront of the interest of the Czech tax administration, either as a result of recent decisions by the Court of Justice of the EU or for other reasons. In this context, we recommend paying increased attention to the following themes in connection with the application of VAT:
 

• the rules for specifying the date of the taxable supply when recharging services connected with leases;
• the clarification of the rules when specifying the date of the taxable supply when recharging utilities;
• free leases of real estate and discounts on leases;
• incentives in leases;
• adjustments to VAT deductions for real estate in the case that the original intention to use the real estate for taxable fulfilment changes;
• the correction of the application of a deduction for significant improvements to real estate.

 
If you are interested in more information, training, the preparation of materials and/or assistance with the implementation of the aforementioned changes, please contact us.