Massive changes in VAT planned from 2020

Andrea Kleinová

As a result of the amendment to the VAT Act, there will be systemic changes in the field of VAT as of 1 January 2020, namely the implementation of the so-called “quick fixes”. These changes are linked to the changes of legislation at EU level and concern mostly supply of goods among its member states.

The changes are related to the following issues:


New condition of having the knowledge of the VAT number of the customer as well as the correct declaration of the supply of goods in the European Sales List introduced for the application of the VAT exemption of the supply of goods to another EU Member State
From 1 January 2020, in all EU Member States will be applicable the rule that the VAT exemption for the supply of goods to another EU Member State will only apply to sales to VAT-registered customers in that EU Member State. The fulfillment of this condition will need to be properly verified through VIES system. Another condition will be that the supplier correctly reports such supply in its European Sales List.

In this respect, we recommend to all taxpayers to verify that the customer has a VAT number assigned via VIES each time an invoice is issued to that customer. As part of the preparation of the VAT return, we also verify the validity of the VAT number. However, VIES is only able to confirm the validity of this number as of the date of the check (i.e. in our case at the date of preparation of the European Sales List). Therefore, if the VAT number was obtained / lost in the meantime between the supply of goods itself and the preparation of the European Sales List, we are unable to verify the existence and validity of the VAT number in a credible manner.

Stricter rules for proof of actual transportation of goods to another EU Member State
The fact that the goods were indeed transported to another EU Member State is a necessary condition for the application of the VAT exemption when goods are delivered to another EU Member State. Changes in this area are therefore likely to have the greatest practical impact.

From the beginning of 2020, the rebuttable presumption will be applicable that transport is proved only if the person applying the exemption (i.e. the supplier) has got the documents required by the Implementing Regulation to the European VAT Directive. The documents can be divided into two groups for the purposes of this regulation. Specifically, the so-called 'primary' documents which relate directly to the dispatch or transport of goods and 'secondary' documents constituting in other supporting documentation.

If the transportation is secured by the seller (or by a third party on its behalf), either (A) two primary documents or (B) one primary document and at least one secondary document will be required to successfully prove the actual transportation. The submission of two secondary documents will not be considered as sufficient evidence.

In the event that the transportation is secured by the buyer (or by a third party on its behalf), the seller must, in addition to the aforementioned documents, also have a written declaration from the buyer with all statutory prescribed requirements . The buyer is obliged to issue this declaration by the 10th day of the month following the month in which the delivery took place.

In any case, the above documents must not be contradictory and must be issued by different, independent parties.

New definition of a common and harmonized rule for the allocation of transportation within the so-called chain transactions
A chain transaction is a transaction where the right to dispose of the goods as owner is transferred at least twice during one transport of goods.

Thus, the transport within chain transactions will be newly primarily assigned to the transaction between the supplier and the intermediary. Only if the intermediary informs the supplier of his VAT number allocated to him by the EU Member State of dispatch or start of transportation, the transport itself  will  be assigned to the transaction between the intermediary and the final buyer.

Unification of the consignment stock regime in the form of call-off stock
Currently, in the Czech Republic the call-off stock regime is set up so that the relocation of goods from another EU Member State to the Czech Republic can be considered as the acquisition of goods by a specific customer (even if the goods have not yet been removed from the warehouse). The customer then self-declares the acquisition of the goods at the moment of putting the goods into store, which also requires issuance of a tax document in the full amount of the value of the transferred goods. When the goods are removed from the warehouse (and thus the actual transfer of the right to dispose of the goods as owner takes place), there is no further VAT reporting obligation and only commercial invoices (i.e. NO tax documents) are issued between business partners.

From 1 January 2020, the entire taxation system for call-off stocks will be completely changed and harmonized at EU level. The customer will now pay VAT, respectively declare the acquisition of goods from another EU Member State only at the moment of actual removal of goods from the warehouse, i.e. at the moment of the actual transfer of the right to dispose of the goods as owner. Therefore, it will no longer be necessary to divide the moment of reporting the delivery / receipt of goods and the actual purchase of goods, and therefore report the tax document separately from the so-called commercial invoices.

On the other hand, this is connected with the new administrative requirements, namely setting a time limit during which the goods can be stored as well as the necessity of keeping specific records on the part of the supplier.

From January 1, 2020, the period for which the goods can be stored in the call-off stock without the need to register the supplier in the state where the call-off stock is located (and thus in the customer's state) will be set for 12 calendar months during which the goods must be removed from the warehouse and thus, taxed.


Andrea Kleinová
Andrea Kleinová
Certified Tax Advisor