In this article, we bring you the most significant changes in the approved amendment to the Value Added Tax Act, which will enter into force on 1 January 2021 (item no. 1), resp. 1 July 2021 (other points listed below).

1. Correction of paid tax in case of bad debt

Under certain defined conditions, it will be possible for a domestic uncollectible receivable, in the case of a customer invoice from which the tax was paid pursuant to § 69 par. 1 of the VAT Act, correct the tax base, which means that the tax administrator will refund to the taxpayer the VAT not paid by the customer, as the VAT system is based on the principle that VAT is levied on the amount actually received. The conditions of uncollectible receivable are regulated by this amendment.

From the point of view of the customer, the debtor, there will be an obligation to correct the already deducted tax in the tax return.

2. Sale of goods at a distance

Amendments to the VAT Act define the sale of goods at a distance, namely the sale of goods within the EU, as well as the sale of goods imported from third countries, as well as change the rules for determining the place of delivery of such goods. The place of supply of goods sold at a distance will be, in accordance with the proposed rules, the Member State in which the dispatch or transport of the goods to the customer ends, in accordance with the principle of taxation of the goods at the place of final consumption. Only if the total value of the supplies does not exceed EUR 10 000 in the current calendar year will the supplier be able to opt for taxation in the country where the shipment begins.

With these changes, the possibility of filing only one tax return for all distance selling (OSS) member states of the European Union is also introduced for trade in goods for end customers.

The aim of introducing these rules is to reduce the administrative burden on businesses. This new legislation replaces the existing legislation on mail order sales.

3. Cancellation of the import exemption for shipments up to 22 EUR

Until 30.06.2021, shipments on import from third countries will be exempt from VAT up to the amount of 22 Euros. This exemption is repealed as it has been identified that this exemption distorts competition between suppliers established inside and outside the EU.

4. Extension of the scope of MOSS. Also OSS will be created

The MOSS (Mini One Stop Shop) system will not only apply to telecommunications services, radio broadcasting and television broadcasting services, and electronic services provided to non-taxable persons, but also to other services (with a place of delivery pursuant to Section 16 of the VAT Act) supplied to territory of the EU to a non-taxable person, such as vehicle rental, scientific, educational and other services.

At the same time, the MOSS system is being introduced for the sale of goods at a distance. As a result of these changes, the MOSS system changes to OSS (One Stop Shop).

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