Amendment to the VAT Act: an overview of new developments from 2025

The Ministry of Finance is working intensively on an extensive amendment to the Value Added Tax Act. The first changes will come into force on 1 January 2025, with more to follow until 2027.

Changes to the Value Added Tax Act

The current version of the VAT Act can be found under 235/2004 Coll. We have prepared an overview of the main changes that should come into force from 1 January 2025. However, the Ministry of Finance has yet to submit these proposals to the Government, so a number of comments and adjustments can be expected during the legislative process.

Simplification of self-billing

If you, as a supplier, provide your customer with a power of attorney, they can issue tax documents on your behalf, receive them directly and keep better track of their due date. This option already exists in the VAT Act, but with the amendment it should be significantly simplified.

Self-created assets

If you have manufactured, built or otherwise created fixed assets as part of your business, this is a special category for which you are now only entitled to deduct VAT at a partial rate. The amendment proposes to abolish the current complicated rules and clarify the scope of the right to deduct tax for assets acquired over several years.

Adjustments to the time limits

The amendment proposes to extend the time limit for correcting the tax base from the current 3 years to 7 years.

Conversely, the time limit for claiming tax deductions, currently 3 years, should be reduced to 2 years. The tax deduction based on the gross-up will then be available only within 12 months.

Delivery of a "new" building

For new constructions, only the first transfer of a completed property will be taxable if it occurs within two years of completion.

Substantial alteration of the building

Substantial alterations to buildings now include, for example, the conversion of a house into a guest house, the construction of a lift on the facade of a house or the addition of further floors to a building. The amendment will redefine what constitutes a substantial alteration.

Outstanding liabilities

As a VAT payer, you will now keep a record of outstanding liabilities. If any remains unpaid for more than 6 months, the customer will have to repay the tax deduction on it.

New forms of tax refund

The amendment to the law should expand the cases when it will be possible to request a tax refund - for example, for tax paid without justification to a provider who refuses to refund it.

It will also include refunds to foreign persons for whom the principle of reciprocity applies (the list of such countries will be published by the Ministry of Finance in the Financial Bulletin) or when goods are purchased from another EU Member State.

The legislation on the VAT Act is undergoing many substantial changes and more are likely to follow. We will continue to monitor the amendments on an ongoing basis.

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