VAT application in travel services pursuant to the Czech and EU legislations and a proposal for amendments in the Czech value-added tax law

• Main Authors: Milena Otavová, Veronika Sobotková
• Format: Article
• Language: English
• Published: Mendel University Press 2010-01-01
• Series: Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis
• Subjects: VAT Directive; VAT harmonization in the field of tourism; margin scheme; special regime for travel services; general regime for travel services; customer travel service
• Online Access: https://acta.mendelu.cz/58/6/0345/

The domain of value-added tax has been already fully harmonized. Its regulation dwells on the Council Directive 2006/112/EC on the common system of value-added tax, and all member countries of the European Union are obliged to provide for the implementation of this Directive into their national legislations similarly as the Czech Republic, which entered the European Union on 1 May 2004. The Act no. 235/2004 Coll. on the value-added tax as amended (hereinafter „value-added tax law“) should be therefore in line with the Directive. In reality however, some issues in the VAT law have not been fully harmonized yet. One of these issues is for example the application of a special routine for travel services according to §89 of the VAT law, which is in essential contradiction with the Directive in question, the controversial point being definition of the person of customer whom the Directive understands in a different way than the VAT law. Thus, the characterization of the problem based on the Czech and EU legislations with respect to jurisdiction of the Court of Justice of the European Community forms a framework of the paper. Based on a comparative analysis of the application of special and ordinary routines in providing travel services to the customer by the taxpayer, tax incidence in his assessment base is determined. At the same time, the paper also includes a proposal for the change of the definition of customer in the VAT law so that the application of the given routine is fully in line with the EU Directive.