Unfortunately, as in some cases happens, the Czech Republic did not manage to implement amendment of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value-added tax (hereinafter referred to as "VAT"), which implements the OSS regime. However, thanks to the so-called direct use of the directive, potential applicants had the opportunity to use the scheme, as early as 1 July 2021. In mid-September, the law in question was finally approved by the Czech Parliament, and after the President's signature, the law was issued in the Collection of Laws with effect from 1 October 2021.
As we have previously informed you here, as a result of the new legislation, the threshold (respectively the total turnover) has been unified to EUR 10,000 and once reached, the entity is obliged to register for VAT in another Member State. The given limit applies in summary to digital services as well as the sale of goods at a distance (formerly known as the dispatch of goods). If the entity does not achieve this turnover and would still like to register for the OSS regime, they will be allowed to do so; however, the regime must be used at least by the end of the second calendar year following the calendar year in which it decided so.
We would also like to point out that a simplified tax document cannot be issued when selling goods at a distance and it is necessary to follow the legislation of the Member State in which the entity is registered to the OSS regime when issuing tax documents.
It is necessary to think about the registration to the OSS regime in advance because if the subject is interested in it, it is necessary to submit an application in the immediately preceding calendar quarter from which they intend to use the regime. If the entity has already provided a particular supply that is subject to the OSS regime (in the EU sub-regime or non-EU sub-regime) and is interested in registering in the OSS regime, such entity is obliged to file an application within 10 days after the end of the calendar month in which the supply was realized.
Part of the registration process by the tax administrator is the assignment of a tax registration number for the purposes of the non-EU sub-regime and the import regime.
Provided that there is a change in the registration data, it must be notified to the tax administrator within 10 days after the end of the calendar month in which the change in question occurred. It is also necessary to proceed in a similar way in the case when the entity is decided not to use the OSS regime anymore.
The tax period is a calendar quarter in the case of a non-EU and EU regime or a calendar month in the case of import regime and the deadline for submission of an ordinary tax return as well as the additional tax return is by the end of the calendar month following the end of the tax period, even if the entity has not carried out any relevant performance for the relevant tax period.
However, contrary to the usual deadline for submission of a return in the Czech Republic, we would like to alert you that if the deadline falls on a Saturday, Sunday or public holiday, the last day for timely submission in the OSS regime is this day, not the next working day, as it is customary here.
The tax subject is obliged to keep detailed records of the supplies provided in the OSS regime. They must keep these records for at least 10 years from the end of the calendar year in which the performance was provided. If the tax administrator, both of the state of identification as well as of the state of consumption, requests the provision of the relevant records, the entity is obliged to provide the records, namely exclusively in electronic form.
Finally, we would also like to inform you about the webinar organized by Crowe on the topic Selling online - practical experience of the new EU VAT e-commerce rules in the EU and UK, where you can get more information related to the above directive. The record from the webinar is available here.
Updated 1 October 2021
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