As of 1 May 2020, the final phase of electronic sales registration (EET), which was brought about by the amendment to the EET Act in 2019, will be launched. The obligation to record sales thus arises for almost all businesses. Only the Constitutional Court of the Czech Republic can delay or cancel the launch of the last phase. Therefore, we summarise the most important information below, as the EET may also apply to you.
Electronic records relate to both natural and legal persons who receive "cash" revenues from business activities.
The conditions for registration of sales are set for registered sales as a payment made in the territory of the Czech Republic that fulfils the formal requirements and establishes decisive income.
The formalities are met by a payment that is made:
- in cash;
- by check, promissory note;
- means of payment for goods or services (electronic wallets, smart cards, coupons, vouchers);
- other forms of a similar nature mentioned above (gift cards, vouchers for goods and services, meal vouchers, payment via tokens, bitcoins);
- settlement of bail or other security.
The decisive income for natural persons is the income from independent activity, which is a business. In the case of legal persons, this is the income from the activity which the business engages in.
Decisive income shall not be considered to be income which:
- is not subject to tax;
- is unique from the point of view of usually accepted sales (according to the GFD Methodical Instruction, an exceptional or one-off payment can be accepted);
- is subject to withholding tax;
- for legal entities, income included in a separate tax base.
Exceptions to the obligation to record sales
Sales by credit card, bank transfer, cash deposit to bank account, direct debit and barter are not subject to evidence of sales.
The Act explicitly excludes from the records sales that have the exclusion justified by the special public status of taxpayers. These are, for example, the revenues of the state, local government, contributory organisations, banks, insurance companies, postal licence holders, savings and credit cooperatives, etc.
Furthermore, the law stipulates which sales are excluded from the sales records. This includes, for example, revenue from postal services, employment-related or similar relationships, catering and schooling provided to pupils and students, from fare, onboard aircraft, from passenger rail transport, from the operation of public toilets, from the sale of goods or services through a vending machine.
As of 1 May 2020, sales records will also not cover social care, services, prevention and rehabilitation. Also revenues from telecommunication services, gambling, commercial air transport, sales by blind or deafblind entrepreneurs, and pre-Christmas sales of freshwater fish.
Evidence of sales in the non-profit sector
There is a special provision for the registration of sales in the non-profit sector whose revenues from minor secondary activities are not subject to registration if two criteria for the reference period (i.e. for the previous calendar year) are met:
- income/revenue from this activity is no more than CZK 300,000; or
- income from this activity was no more than 5% of total income/revenue.
Special regime for registration of sales from 1 May 2020
This is a special scheme that must be approved by the tax administrator at the request of the business. Subsequently, it is possible to issue receipts to customers on blocks received from the tax administrator. Revenue data will be reported quarterly to the tax administrator.
Taxpayers can submit applications as of 1 February 2020. But not everyone can apply for this scheme.
The first group that can apply for a special scheme are providers of health services covered by public health insurance, who receive reimbursements from health insurance companies for their services.
The second group of taxpayers who can apply for this scheme are natural persons only, provided that all the following conditions are met at the same time:
- they are not VAT payers;
- they do not conduct business with more than two employees;
- their income from registered sales does not exceed CZK 600,000 for the four immediately preceding calendar quarters, and the expected amount of such income in the 12 immediately following calendar months does not exceed CZK 600,000.
Revenue registered under the simplified scheme
If the registration of the given sales would make it impossible or would fundamentally impede the smooth and efficient performance of the activity, it is possible to record sales in the simplified regime based on an approved application by the tax administrator. Sales that can be recorded under this scheme come from the sale of goods and services onboard means of transport for regular mass transport of persons pursuant to the Value Added Tax Act.
Under this scheme, the taxpayer is obliged to send the data on registered sales to the tax administrator via the data box no later than five days from the date of the registered sales and is not obliged to state the fiscal identification code on the receipt.
Basic steps before starting to record sales in normal mode
- Acquisition of cash register equipment for sales registration (checkout, computer, tablet or mobile phone)
The equipment must be technically capable of sending the required data on registered sales via the internet to the tax administrator and issue a receipt to the customer.
- Obtaining authentication data and establishing access to the Electronic Sales Revenue web application
The business asks the tax administrator for authentication data that allows it to access the web application. It is possible to apply electronically on the Tax Portal by means of login data to the data box or in person at any tax office.
- Obtaining and installing the certificate
After logging into the web application, the business registers its premises and then generates a certificate. It installs this certificate in its cash register.
Monika Mikulová, [email protected]