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Czech extension of VAT reverse charge

  • Jul 23, 2015 | Richard Asquith

Czech extension of VAT reverse charge

From 1 July 2015, the Czech tax office extended the application of the VAT reverse charge to a range of agricultural crops.

The domestic reverse charge is a mechanism used to help prevent so-called missing trader VAT fraud. This is a activity whereby criminals target the EU VAT simplification procedure to obtain VAT refunds. Criminal claim to make sales of goods across EU borders, which are generally VAT free. In reality they sell the goods within their country, charging VAT but pocket the tax instead of declaring it to the tax authorities. The current Czech VAT rate is 21%.

Under special powers granted by the European Commission, countries may eliminate VAT on domestic trades where they suspect such fraudulent activity. In the past, this has included computer chips, mobile phones, laptops, precious metals and carbon trading licenses.

In this instance, the Czech tax office has identified the trader of cereals, oats, peanuts, wheat, sesame seeds and rye. The use of the reverse charge will be for single transactions above CZ Koruna 100,000.

The EC estimates that missing trader fraud has cost the member states up to Euro 100 billion per annum.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.