The Value Added Tax Act Amendment

Effective from: 31 December 2016, event. 1 January 2017
The amendment changes the taxation of construction works supplies.
VAT liability is transferred to a purchaser if both the purchaser and supplier are VAT payers. Transfer of VAT liability means that the purchaser must declare and pay the VAT. At the same time the purchaser has a right of VAT deduction upon meeting the legal conditions. This transaction of VAT liability transfer is neutral for the purchaser with a right of full VAT deduction.



Newly, the taxpayer has a right for compensation for detention of excessive VAT deduction (during the tax audit). The taxpayer can require this compensation if the excessive VAT deduction is not returned within 6 months from lapse of term for its return due to tax audit.


Compensation is set in the amount of double the prime rate of the European Central Bank, but not less than 1.5% p.a. If the taxpayer fails to repeatedly fulfil their duties during the tax audit or the compensation would be less than EUR 5.00, the compensation will not be granted.