VATLive > Blog > EU VAT > Czech Republic VAT generalised reverse charge EC approval

Czech Republic VAT generalised reverse charge EC approval

  • EU VAT
  • Jun 25, 2019 | Richard Asquith

The Czech Republic has been given the greenlight from the EU’s European Commission to introduce the generalised reverse charge on all domestic transactions above €17,500. The measure, if approved by the EU Council, will come into effect on 1 January 2020 for two and a half years. It will then be assessed for impact and benefits.

The general reverse charge mechanism effectively withdraws the VAT cash payment from a transaction in an effort to eliminate the opportunity for fraud. The seller does not charge VAT; instead, the purchasers reports the sale through their own VAT return without any cash payment ('reverse charge'). Up until now, it has only been permitted as a derogation from the EU VAT Directive in sectors vulnerable to VAT fraud, including: laptops; computer chips; mobile phones; carbon credits; precious metals; and other commodities.

The Czech Republic had long campaigned for the derogation from the EU VAT Directive to help fight missing trader fraud. This accounts for up to €50billion a year of the EU VAT Gap, the difference between anticipated VAT revenues and actual receipts. The EU member states finally conceded at the end of 2018. The measure may only be granted to member states with a VAT gap of more than 5% of the EU’s median, of which at least 25% must be accounted for by missing trader / carousel fraud.

A number of countries, including France, where against the measure as it could undermine a core concept of the EU VAT regime, VAT charged and collected throughout the production chain. Also, it may simply encourage criminal gangs to move to other EU member states that have not opted to adopt the mechanism.


Latest Czech news

Czech VAT live B2C electronic reporting of revenues

February 21, 2019

The Czech Republic is moving to launch the fourth phase of roll out of live electronic reporting of retail cash and credit card payments by consumers in person or online.

Czech VAT generalised reverse charge 2020

January 26, 2019

The Czech Republic has become the first EU member state to request to apply the generalised reverse charge mechanism (GRCM) on domestic supplies. Its Ministry of Finance said it will look to introduce the measure in July 2020 if approved by the European Commission.

EU VAT and tax veto review

January 25, 2019

The European Commission (EC) has proposed switching from unanimous to majority voting on EU VAT and other tax policies.  The aim is to progress fiscal reforms which face immovable opposition from just a limited number of member states. 



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 is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
VATlive newsletter

Sign up for our free newsletter stay up-to-date with the latest tax news.

VAT Voice


Sign-up to VAT Voice, Avalara’s monthly round-up about VAT and legislation updates to help you stay ahead of the curve.