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The Ministry of Finance, in cooperation with the General Financial Directorate (“GFD”), recently launched an Electronic Sales Register website (“ESR”). In addition to providing general information and answering FAQs, the website clarifies the grounds for the ESR and outlines certain technical principles. The GFD admits that catering services may be reclassified from a standard VAT category to a reduced 15% one.

The Ministry of Finance has already dealt with the comments on the ESR Act. The Ministry of Finance responded to the discussion and observations during the consultation proceedings by making several changes. For example, the customer’s duty to accept a bill was deleted, and the penalty system has undergone substantial changes. Closing or suspending the operation of a breaching party’s establishment serves as a preliminary measure which can only be applied on a temporary basis until the breach is remedied.

While the ESR Act continues to be designed to apply nation-wide, the applicable implementation decree temporarily exempts all operations except for accommodation and catering services, wholesale and retail sales from the duty to keep sales records. The ESR Act will extend to other operations later after the tax authorities conduct a risk analysis.

The Ministry of Finance contemplates granting a CZK 5,000 one-off tax break to all personal income tax payers who would be obliged to keep sales records for the particular year as compensation for increased costs which they will incur as a result of the ESR Act.

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