An important amendment to the Excise Tax Act was adopted far in advance by Act No. 179/2022 Coll., a substantial part of which comes into effect from 13 February 2023. Some of the provisions will already be effective from 1 November 2022 and the change concerning the beer tax warehouse already came into effect on 28 June 2022.
This amendment to the Excise Tax Act will implement changes brought about by European Union law, especially in the following areas:
i) the conditions under which excisable goods may be transported in free tax circulation between Member States;
ii) the conditions for distance sale of excisable goods to consumers in another Member State;
iii) the application of the tax in the event of losses of excisable goods, including losses due to the nature of the goods and “technically-justified” losses;
iv) the connection of electronic systems monitoring the movement of excisable goods under the duty suspension regime with the customs system for the import and export of goods.
The aforementioned amendment does not change the tax rates.
The greatest impact is likely to be the change in conditions for the transport of excisable goods in free tax circulation between Member States. In particular, the excisable goods in free tax circulation between Member States are transported by small and medium-sized enterprises that do not have tax warehouses or the status of authorised consignee and therefore transportation cannot be carried out under the duty suspension regime. Excisable goods transported in free tax circulation are subject to monitoring by the customs authorities, since they are subject to excise duty in the Member State of destination (with some exceptions) and only in connection with such taxation does the right to a tax refund in the Member State of dispatch arise. It is currently the duty of each recipient of these excisable goods from another Member State to register as an excise duty payer, to notify the tax administrator of each individual acceptance of such goods and to provide security of the tax if the acceptance of the goods in the Czech Republic creates an obligation to declare and pay the excise duty. Currently, the excisable goods transported in free tax circulation between Member States must be transported together with printed accompanying documents.
The main change that the aforementioned amendment will bring in connection with this transportation is that electronic accompanying documents will be issued instead of paper accompanying documents, and the carrier will only communicate the “reference” code assigned to the given transport during the inspection of a tax administrator, instead of presenting it in document form. The application of an automated electronic system to this type of transport will enable the tax administrator to monitor the real-time movement of these goods, as in the case of excisable goods transported under duty suspension regime. Due to the introduction of electronic accompanying documents for the transport of excisable goods in free tax circulation between Member States, the current electronic system of the EMCS (Excise Movement and Control System), which is currently used exclusively for the transport of excisable goods under the duty suspension regime, will be expanded.
In connection with the aforementioned change, the status of the so-called registered consignor and registered consignee is introduced for persons between whom excisable goods are transported in free tax circulation. On the basis of their notification that they intend to supply excisable goods in free tax circulation between Member States, these persons will be assigned a unique number for transport in free tax circulation. In view of the full functionality of electronic transport documents as from 13 February 2023, the provisions governing the notification of the registered consignor and the registered consignee and the allocation of unique transport numbers will be effective from 1 November 2022. Contrary to the current regulations, the recipient of the excisable goods in free tax circulation from another Member State will not be obliged to register for excise duty.
If the aforementioned changes will apply to you, we recommend that you do not leave their implementation until the last minute and that you take advantage of the earlier effectiveness of the relevant provisions. In addition to these notifications and obtaining a unique number for transport in free tax circulation, it is also necessary to ensure functional access to the EMCS and, in many cases, to set up appropriate responsibilities in your company.
If you are interested in more detailed information regarding the impacts of the aforementioned amendment to the Excise Tax Act or need help with their implementation, please contact us.
Author: Pavla Polanská, Tax Manager