By act no. 170/2017 effective from 1 July 2017, special stipulations for VAT have been cancelled in the VAT act for persons, who have united and provide their activities in the form of a consortium agreement. On 31 December 2018, a transitional period, during which it was possible to proceed according to previously valid stipulations, ends.

Beginning from 1 January 2019, all partners already need to proceed according to the new legal regulations, which do not reflect the existence of a consortium in any way and every partners proceeds as a separate person liable to taxes separately. This means, among other things, that some partners may not reach a turnover for obligatory VAT registration from their own activity and activity within the company and may request deregistration. Compared to the current situation, it will thus be possible for VAT payers as well as non-payers to be united in the form of a consortium. Records will no longer be kept and declaration and reports submitted by an appointed partner, but every partner will reflect his transactions for himself. In practice, it will be necessary to deal with the effects of this change in various areas, such as for example the issuing of tax invoices and occurrence of chargeable events, application of entitlement to VAT deduction, VAT settlement in case of termination of membership of a partner or a company and others.

The effect of the amendment may bring about a need for revision of the setup of invoicing for the company and between partners. We recommend dealing with this issue before the end of the year 2018 already. In case you are interested in this issue, please, contact us.