Czechia: Modernizing VAT for Today’s Digital Economy

The European Commission has approved modifications to modernize the VAT system, including mandatory electronic invoicing and digital reporting for cross-border transactions, VAT application in the platform economy, and VAT registration extension

Aiming to lower administration and capture the risk of VAT fraud in the digital economy, changes have been approved at the EU level.

A number of modifications to modernize the VAT system have been approved by the European Commission. The following areas are intended to be addressed.

Introducing electronic invoice-based digital reporting for companies conducting cross-border operations in the EU

The following transactions between taxable persons will be subject to mandatory electronic invoicing and digital reporting as of July 1, 2030:

• Supplies of goods between EU Member States
• Movement of personal belongings within the EU, unless a unique one-stop shop program is employed
• Sales of goods and services under the reverse charge regime

1. Application of VAT in the platform economy: VAT on certain services (transport and lodging) should be paid by the presumed provider running the platform.
2. Extension of the so-called one-stop shop OSS regime to other transactions: VAT registration

The early stages of putting the innovations into practice are anticipated to occur between 2027 and 2030