As of 1 January 2015, the rules for determining the location of taxable fulfilment for provision of telecommunication services, radio and television broadcasting services and electronic services have changed. The change also affects our company's services and in particular will affect billed VAT amounts, which will newly be collected at the rate applicable in the country of the customer's registered seat.
In the Czech Republic, the new rules are defined by Act No. 235/2004 Coll., the VAT Act, in connection with Annexe No. II of Directive 2016/112/EC. Under Regulation 282/2011/EU, Coolhousing as a provider is required based on information from the recipient (customer) to determine and through regularly used means to verify the customer’s place of business and collect and pay the correct VAT rate based on that location.
Fortunately, the new regulation does not require the providers to make direct payments in the customers’ countries, but instead everything can be resolved through domestic revenue authorities. However, there is one change for foreign customers: VAT for payment to revenue authorities abroad will have to be declared in euros, and it will also be necessary to collect it in euros. Customers with registered seats abroad will be required to issue invoices in euros with calculation of VAT in accordance with the applicable rates in the particular member states.
Domestic customers will not notice this tax change. Foreign customers will be issued invoices in euros, and depending on the amount of VAT in the particular member state, the final price of the service may change by the difference in the VAT rate, which, however, as a provider we cannot influence. Of course, we are not changing our prices without VAT.
In short:
- Customers from countries outside the EU will continue to be invoiced without VAT.
- Each customer from an EU country (except the Czech Republic), where the customer has a valid Tax ID Number, will also continue to be invoiced without VAT.
- Each customer from an EU country (except the Czech Republic), where the customer does not have a valid Tax ID Number, will be invoiced including VAT in the standard rate based on the location of the customer’s registered seat.
- Customers from the Czech Republic will continue to be invoiced including the standard VAT rate valid for the Czech Republic.
Author: Jirka Dvořák
