As of 1 January 2010, some changes will come into force in relation to VAT. These changes are included in the “budget package” as well as in an amendment to the VAT Act, which has only recently been passed by the Chamber of Deputies, with the legislative process not yet completed.
Place of supply with respect to services. The place of supply will be determined based on the registered office of the service recipient. Therefore the “reverse charge” principle will apply to most services. This could result in a simplification for the payers. The changes will affect areas such as transport of goods, work carried out on movable assets and storage.
Arm’s length price in the case of related parties. The amendment to the VAT Act introduces rules for adjusting the tax base to the arm’s length price level for transactions between related parties, which are specifically defined for VAT purposes. Such parties will also include the employees of the payer. The obligation to set the tax base at the arm’s length price level is limited only to situations where the application of a different price could result in a tax revenue reduction. For example, this provision will not apply to transactions effected between two VAT payers that are eligible for a full deduction.
European Sales List. As of 2010, the duty to file European Sales lists will be expanded to cover also the provision of services where the place of supply, pursuant to the basic rule, is another member state. In most cases, statements will be filed monthly and only in electronic form.
Taxable period applicable to branches.  The criteria for determining the length of the taxable period will be changed for VAT-registered establishments of foreign entities. It will be determined based on the establishment’s (branch’s) turnover for the preceding year. If the turnover is CZK 10,000,000 or above, as of 1 January 2010, the taxable period will be the calendar month. If the turnover ranges between CZK 2,000,000 and CZK 10,000,000, the taxable period will be the calendar quarter, although the establishment will be able to opt for a monthly taxable period following a notification to the respective tax authority. There will be no change when the turnover is under CZK 2,000,000.