The Value Added Tax Act in the Czech Republic, with planned effect from January 2019, redefines both the taxable person and economic activity.
The activities subject to income tax pursuant to Section 6 of the Income Tax Act (employment activity) have not been classified as economic activity pursuant to the wording of the Czech VAT Act. Under the amendment to the VAT Act, the economic activity carried out independently will not include the activity carried out by any employees or other persons who have concluded a contract with an employer, establishing a labour relationship between the employer and the employee, or, as the case may be, the activities carried out by any persons and taxed as income from employment activity under a special legal regulation.
The amendment to the VAT Act will thus bring new obligations for the executives acting as natural persons, who will be obliged to register as VAT payers and submit VAT returns and control statements after the relevant turnover has been exceeded.
More detailed information on this topic can be found in the next issue of our newsletter.