Simplification for consignment warehouses has been effective since January, but…

Although Czech lawmakers have failed to approve the amendment to the VAT Act, which will take effect as required by the EU Directive from 1 January 2020, EU firms and businesses in the Czech Republic can benefit from simplification for consignment warehouses already from 1 January. This is because while EU entities follow local amended laws, their Czech customers as purchasers may rely on the direct effect of the EU Directive.

The situation is more complicated in the case of consignment warehouses, which Czech payers would like to operate in EU countries under the new rules. According to the EU Directive, one of the conditions for applying the simplification is to include the taxable entity's identity together with its VAT number in the recapitulative statement. This should be different from the existing condition, as it will not include the value of the goods being moved or the number of fulfilments, but only the recipient's VAT number. The value will be reported only when the receiver takes the goods from the consignment warehouse. The fact that the current recapitulative form corresponds to Article 262 (1) of the Directive and not to Article 262 (2), to which the provisions on the warehouse regime in the Directive refer, makes it practically impossible for a Czech entity to establish a consignment warehouse in the EU. The Czech taxpayer cannot state the transfer to the recapitulative statement and thus fulfil the condition laid down for the storage regime by the EU Directive. The Czech amendment to the VAT Act is expected to take effect on 1 April 2020. At the latest, we will probably see a new recapitulative form corresponding to the warehouse regime.