Source SNI
Czechia (The Czech Republic), similarly to other Eastern European Union countries, struggles with significant losses due to its VAT gap.
There are solutions in place in Czechia (the Czech Republic), which are aimed to make VAT collection more effective. One of the most important is the VAT Control Statement (Kontrolní hlášení DPH) – a detailed transactional VAT reporting requirement. Although the Control Statement is already in force as of 2016, it is worth sharing more details about this obligation, since this is quite complex reporting and businesses may still face issues with Control Statement compliance.
VAT Control Statement – legal background
The VAT Control Statement went into force in January 2016. The legal basis for imposing this requirement is article 101c of the Czech VAT Act. The report needs to be submitted by registered Czech VAT taxpayers, including foreign entities registered for VAT purposes in Czechia (The Czech Republic).
The VAT Control Statement does not substitute the VAT Return and Recapitulative Statement (EC Sales and Purchase List). All those reports need to be submitted to tax authorities in parallel. The deadline for filing the VAT Control Statement is the same as for VAT returns. For taxpayers following the monthly VAT settlement, the submission date is the 25th day after the reporting period.
Not fulfilling VAT Control Statement obligations may be subject to quite serious penalties. The range of sanctions is between CZK 1,000 (EUR 40) to CZK 50,000 (EUR 2,000). In serious cases, when a taxpayer does not file the VAT Control Statement, even after summons from the tax authorities, penalties may be as high as CZK 500,000 (EUR 20,000). Also, similar penalties apply for inaccurate reporting. Worth underlying is the fact that Czech tax authorities are known for their strict approach to data reported in the Control Statement. Even relatively small discrepancies, such as minor differences in values reported in the VAT Return and VAT Control Statements, will be detected by Czech tax authorities and have to be corrected.
Other sources
