Introduction of the guarantee for the unpaid VAT – Sections 109 and 109a of VAT Ac

The amendment to the VAT Act implements Article 204 of the Directive no. 2006/112/EC. Its purpose is in particular to fight against tax frauds.
Section 109 of the amended VAT Act provides for two cases of the guarantee of the recipient of the taxable supply for the VAT unpaid by the supplier of the taxable supply.

Gurantee according to the Section 109 para 1 of the VAT Act.

The guarantee of the recipient of the taxable supply provided that (i) the place of the taxable supply is in the Czech republic and (ii) in the time of the taxable supply, the recipient of the taxable supply knew,  or should and could have known, that:

1. the tax mentioned in the tax receipt will not be paid deliberately, or
2. the VAT payer deliberately got into or will get into the situation disabling him to pay the tax, or
3. the tax fraud will happen.

The guarantee obligation occurs at moment of the taxable supply.

The guarantee obligation may arise due to mere negligence of the guarantor.

Gurantee according to the Section 109 para 2 of the VAT act.

The recipient of the taxable supply is guarantor of the unpaid VAT, provided that the payment for the taxable supply is, without any economic grounds, obviously deviate from the customary price.

Others:

The recipient of the taxable supply may pay the tax for the supplier of the tax supply and eliminate the risk that the tax office will address him as tax guarantor.

The tax is payable with the tax office of the supplier of the tax supply and is deposited on its separate account. On the day the tax become due the payment is transferred to the regular account of the supplier of the tax supply.

The new regulation is applicable only to the cases when the conditions for the guarantee occur after its entry into force.