Changes in services´ taxation directly related with an export
The interpretation of services related to an export changes as of the 1st of March. While still valid, these services are exempted from VAT, the exemption will apply to the direct providers from March.
The change follows on from the judgment of the European court, which solved in case of the L.Č. at the end of summer, if it is possible to exempt a transport service that applies to the export but it is provided by the transport service for transport, which will subsequently invoice that to the exporter. While the usual practice allowed exempting the transport between a shipper and a forwarder as well as between a forwarder and the exporter in the Czech Republic, the European court thought that only the transport directly related with an export could be exempted. It means that only the transport between the forwarder and the exporter. In the case when a subcontractor provides the transport between a shipper and a forwarder, the court decided that this transport should be taxed.
Because the subcontractor-shippers who started to apply the VAT after the court´s decision did that in the spirit of the court´s decisions but against the stable interpretation of the tax administration, the General financial directory published information when it says that by VAT application in the relevant matter, the same interpretation will be applied from the view of an united method from the 1st of March 2018, where that there has to be a contractual relationship between a service provider and an exporter for the exemption of the transport.
- Example: Exporter A will hire a company to ensure the transport of goods and the customs execution of the delivery from the Czech Republic into Switzerland. The transport company does not have enough of its own trucks and that is why this company will hire the transport of the goods from the Czech Republic into Switzerland by shipper B. From the 1st of March, shipper B – the VAT payer – has to invoice its services to the transport company with VAT. The transport company will, from now on, invoice its services as exempt from VAT because these services are provided directly to the exporter. Unlike the export, the interpretation does not change in the case of the transport related to an export. If the transport is a part of the tax by delivering = the shipper includes the transport into the tax base showed in line 7 or 8 of the tax return, it is possible to exempt the transport provided by subcontractor.
- Example: Importer C will hire a transport company to ensure the transport of the goods and the customs execution from Switzerland into the Czech Republic. The transport company does not have enough of its own trucks and that is why this company will order the transport of the goods from Switzerland into the Czech Republic by shipper D. After the 1st of March also, shipper D – the VAT payer – will invoice the transport, exempt from VAT, to the transport company. The importer will include the invoice from the transport company together with the value of the goods subject to the basic tax rate on the 7th line of the tax return.
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