Czech Republic: Sale of land treated as sale of goods for VAT purposes; no reverse charge for supplies of moveable items

The KPMG member firm in the Czech Republic prepared reports about the following decisions of the Supreme Administrative Court relating to value added tax (VAT) (read more at the hyperlinks provided below):

• Calculation of reduction coefficient upon sale of land: The court held that a taxpayer was required to include a sale of land in calculating the reduction coefficient because even though the taxpayer accounted for the land as a fixed asset and engaged in some small-scale use of the land while it held it, the taxpayer’s main economic activity was development, and the taxpayer acquired the land with the intention of its subsequent sale. The court thus agreed with the tax authority that the land was inventory, and its sale was a sale of goods for VAT purposes. Read a May 2023 report prepared by the KPMG member firm in Czech Republic
• Application of reverse charge to supplies of movable items when providing construction or assembly work: The court held that the reverse charge regime did not apply to supplies of certain moveable items (i.e., a refrigerated truck, a digital scale with label printer, a vacuum packer, stainless steel racks, a glass refrigerator, a hand forklift, a refrigerator and freezer, cheese molds, mobile work desks and steel racks) when providing construction of assembly work in connection with modernizing a dairy. The court found that the reverse charge regime only applied to the delivery and installation of equipment firmly attached to the dairy (e.g., industrial machines for milk filtration, centrifugation, pasteurization, ventilation, or homogenization). Read a May 2023 report prepared by the KPMG member firm in the Czech Republic