It's annual accounts time. This involves not only the rigorous documentation and examination of balance sheets, but also the effort to resolve open business cases. As a result, various credit notes, bonuses and late approved invoices received need to be reflected in the VAT return. Is it possible to include everything in the regular tax return or do you need to file a supplementary return? Let's take a look at a few situations.
1. Correction of the tax rate always leads to an additional return
The payer received an invoice on 7 February for January at the basic rate of 21% but was convinced that the correct rate was 15%. After a few weeks they convinced the supplier that they were right and the supplier issued a corrective tax invoice for the difference in rates. The issuer is entitled to have the tax authorities refund the difference by which they originally paid more VAT, but only by filing a supplementary tax return for January. The recipient does not have to correct anything because, even though they received the receipt at 21%, they could only claim VAT on it at the correct rate, i.e. the 15% rate.
2. The right to deduct is three years, but beware of the coefficient
If a taxpayer accepts a tax document for which they are only partially entitled to a deduction because they use the services received or the goods purchased both for an activity on which they pay VAT and for an activity that is exempt without a deduction, they are limited to the period in which they can claim the deduction. The period for claiming the deduction remains three years in this case, but in a regular tax return the taxpayer can only claim such VAT in the year in which they could have claimed VAT on the purchase for the first time. Thus, in February, they cannot put in a deduction document with a partial deduction received in December of the previous year and must file a supplementary tax return by December to claim the deduction.
3. Omitted invoice for the purchase of goods from the EU
When reconciling mutual receivables and payables in February, the payer discovers that their December invoice for goods from Germany got stuck in the approval process and did not reach the accounting office. The Czech VAT Act allows the invoice for the purchase of goods from the EU to be shown and therefore taxed in the regular tax return without penalty and with a delay. This is possible even if the invoice relates to a previous calendar year, provided the taxpayer purchaser is fully, not partially, entitled to deduct the invoice.
4. Credit note for change of tax base
The adjustment of the tax base is a separate taxable supply and is therefore always included in the regular tax return for the period in which the event leading to the change in the tax base occurred. This may be, for example, the date of an agreement to reduce the price, the date of repayment of a payment received or the date of approval of a reorganisation plan.
5. Do not forget to change the advance coefficient
Taxpayers who must reduce their deductions by a factor will calculate a settlement factor on their December or fourth quarter tax return. They then use this as a backup in the following year. When the previous year's settlement factor is changed retroactively, the payer must start using the changed factor in the new year from the month/quarter after the payer's new settlement factor was assessed.