An amendment to the VAT Act introduces new obligations for entrepreneurs – such as the obligation to return the deduction from invoices that remain unpaid within 6 months from the due date.
Introduction
The Czech Value Added Tax Act (VAT Act) has been expanded to include a new section – Sec. 74b, which stipulates that a VAT payer (customer) who has received taxable supplies is obliged to reduce the VAT deduction they already claimed if they failed to pay the invoice even after six full calendar months have lapsed since the month in which the invoice was due.
This obligation applies only to supplies for which the tax liability is being fulfilled by the supplier, not the reverse charge mechanism. The amendment applies only to supplies for which the VAT deduction entitlement arose after 1 January 2025. The new Section 74b does not apply to supplies prior to this date. The first time this obligation will apply is in the tax return for July 2025 (for monthly payers).
Deadline and Refund Timing
The decisive date for calculating the deadline is the due date of the taxable supply (liability). This date marks the start of the deadline, which ends on the last day of the sixth month following the month in which the liability became due.
Example for Monthly Payers
On 20 February 2025, supplier P provided customer V with a service (taxable supply) in the amount of CZK 121,000. The tax document was issued on 20 February with a maturity of 14 days, i.e., until 6 March. Customer V did not pay the invoice by the due date but claimed a deduction of CZK 21,000 in VAT for February. If the invoice is not paid by the end of September, the deduction claimed in the September tax return will have to be refunded, as 30 September is the last day of the six-month period that began in April.
Example for Quarterly Payers
Payer AB reports quarterly. From an invoice due on 3 February, they claimed a VAT deduction for February. They paid the invoice on 26 September. As a quarterly payer, they do not reduce the originally claimed deduction because the invoice was paid by 30 September, the end of the third quarter.
Reporting the Adjustment
Depending on the tax rate, the debtor reports the refund of the deduction on line 40 or 41 of the tax return as a negative value, and simultaneously on line 34 as a positive value. The original tax return is never corrected. All adjustments are reported in the period in which the obligation to return the VAT deduction arises or when the claim arises again after payment.
In the control report, the correction (both reduction and increase) is always reported in Section B.2 and marked with “P” in column 12. Reductions and subsequent increases are unilateral operations by the customer; the supplier does not make any changes or issue corrective documents.
Subsequent Adjustment After Payment
If the customer later pays the debt, they can reclaim the VAT deduction previously returned. The claim arises in the period of payment, and must be claimed by the end of the second calendar year after payment, or it is forfeited. The increase is reported on line 40 or 41 of the VAT return with a plus sign, and simultaneously on line 34 with a minus sign.
Practical Implementation
Customers must monitor invoices overdue for more than six months. Attention should be given to partial payments, different tax rates, or changes in coefficients. Specific cases are detailed in the General Financial Directorate’s memorandum on the correction of VAT deduction claims for overdue receivables (Section 74b of the VAT Act) from 1 January 2025.
Regular monitoring of liabilities, timely identification of risky cases, and correct implementation of corrections can prevent supplementary assessments and penalties.
Source:
Zákon č. 461/2024 Sb., zákon kterým se mění zákon č. 235/2004 Sb., o dani z přidané hodnoty, ve znění pozdějších předpisů, zákon č. 329/2011 Sb., o poskytování dávek osobám se zdravotním postižením a o změně souvisejících zákonů, ve znění pozdějších předpisů, a zákon č. 358/2022 Sb., kterým se mění zákon č. 329/2011 Sb., o poskytování dávek osobám se zdravotním postižením a o změně souvisejících zákonů, ve znění pozdějších předpisů, a některé další zákony
Informace GFŘ k §74b ZDPH