On 9 October 2019, and amendment of act no. 112/2016 Coll., on the use of electronic cash registers, promulgated under number 256/2019 Coll. was published in the journal of laws. This amendment introduces, among other things, the option of recording sales in
so-called special regime. The record-keeping obligation is not performed electronically in this case, but in paper form using a receipt pad that will be provided directly by the tax administrator.

Who can record sales in special regime

Sales may be recorded in special regime by:

• personal income tax payers,
• corporate income tax payers, who are operators of healthcare services covered by public health insurance (this does not apply for example to aesthetic medicine clinics) and who hold an authorization to provide healthcare services according to the respective act.

It is not possible to permit special regime for a taxpayer, who receives revenues based on indirect representation, or for a taxpayer, who has been commissioned to record sales by another taxpayer.

The conditions for recording sales in special regime

For taxpayers, who request recording sales in special regime, the following conditions must be duly met:

1. the taxpayer is not a VAT payer in the Czech Republic,
2. the taxpayer does not have more than 2 employees,
3. the total income from recorded sales in the 4 immediately preceding calendar quarters does not exceed CZK 600,000 and the expected sum of this income in 12 immediately following calendar months does not exceed CZK 600,000.

In his request to be permitted to record sales in special regime, the taxpayer must prove fulfilment of conditions b) and c). Condition a) is verified by the tax administrator himself from his own register.

Condition b)

An employee is understood to mean a natural person, who performs work in an employment relation or based on a contract for work performed outside an employment relation. More employees are only admitted in case some employee is on leave or is prevented from working by obstacles on his part (incapacity to work, maternity or parental leave etc.).

According to the given example, it can be expected that a taxpayer with 3 employees working part-time cannot request to be permitted to record sales using special regime.

Condition c)

The limit of CZK 600,000 only relates to revenues that are subject to the record-keeping obligation. Non-cash payments (payments from one account to another, card payments) are not included in the limit, as well as payments, which do not originate from business (for example income from rent according to article 9 of the ITA).

To prove the sum of expected income, a qualified estimate of the taxpayer suffices. This qualified estimate should be based mainly on the taxpayer's business intention and preliminary calculations of income in the following period, reflecting any greater changes that my affect the taxpayer's income.

Request to record sales in special regime

The request to record sales in special regime is to be submitted to the respective financial office that has substantial and territorial jurisdiction from 1 February 2020 at the earliest.

The request to be permitted to record sales in special regime must contain the following:

• facts proving fulfilment of the conditions for being permitted to use the special regime – see above,
• data about business premises, where the taxpayer accepts registered revenues – the taxpayer will state the type of business premises including their localisation data according to the type of business premises.

The financial authority should decide about a request within 30 days from its submission. Upon receiving the decision, the taxpayer will then collect the receipt pad at the financial office.

The permit is issued without a time limit, and it lapses either by cancellation of the permit by the financial office or upon request from the taxpayer or ex officio, or at the moment of sending data about recorded sales to the tax administrator by means of a data message (online).

The taxpayer's obligations

When recording sales in special regime, the taxpayer is obliged to perform the following obligations:

• to issue a receipt from the receipt pad for the customer upon the performance of the recorded revenue at the latest (in case of an error on the receipt, the taxpayer will correct the error directly on the receipt that contains the erroneous data),
• to archive a duplicate of the receipt issued in the respective taxable period until the expiration of the preclusive deadline, within which it is possible to assess additional income tax for the taxable period, in which the receipt was issued,
• to submit a notification of sales,
• to announce changes in conditions, which are referential for the permission to record sales in special regime within 15 days from the day, on which these facts occurred,
• to announce changes in data relating to the business premises within 15 days from the day, on which these changes occurred,
• to place an information notice on the business premises, where recorded revenues take place, same as taxpayers recording revenues in the regular or the simplified regime do.

Notification of sales

A notification of sales needs to be submitted to the tax administrator for every calendar quarter, in which recorded sales took place, were returned or corrected, within 20 days after the end of the calendar quarter.

In the notification, the taxpayer states especially:

• his identification and contact data,
• a specification of the business premises, where the revenues took place,
• data relating to the receipt pad and the receipts issued by the taxpayer in the given taxable period, or lost, stolen, damaged or destroyed,
• the number of sales realised on the given days and their sum reflecting any potential reversals or corrections.

Conclusion

The intention of the lawgiver was to introduce recording sales in a special regime, in order for taxpayers, who have business as their secondary activity and have only a minimum of recorded sales, to not have to arrange a cash register device, printer, or Internet connection for their shop for recording sales.

Recording sales in special regime eventually represents a high administrative burden, though, especially due to stating the number of sales and their amount by individual days. In the course of the legislative process, there were proposals for these data to be stated by individual months, which would, to a certain extent, represent a simplification for the taxpayers that had been the original intention of introducing the special regime.

It may thus be expected that record of sales in special regime will not be used by taxpayers to any great extent and a vast majority of taxpayers will prefer to record sales using the regular regime. In case of any questions or if you are interested in consultation, we will be happy to help.

David Mikolášek and Richard Knobloch