Obligated EU Sales List reporting for VAT-registered businesses (ESL)
The EU VAT PackageFrom 01.01.2010 on, Czech Republic complies to the EU VAT Package which has many (unpleasant) consequences for most businesses.
Not only VAT rules (especially for services and electronically supplied services) have changed, but there is also an obligated electronic reporting called EC Sales List, which has an impact on all VAT-registered businesses selling in EU.
Reporting your EU sales using the EU Sales List (ESL)If you are a VAT-registered business in Czech Republic that supplies goods and / or services to a VAT-registered customer in another European Union (EU) country, you'll have to report to the tax office your sales on monthly basis (for goods) or quarterly basis (for services) using an electronic report in XML format which must be sent to the tax office using the datová schránka or using special software and an electronic signature.
The information you give on the ESL is used by the tax authorities in other EU countries. They use it to check that the businesses you've supplied your goods and/or services to are dealing with the VAT correctly. *
The details are also used to build up anonymous statistics showing how goods / services are traded in the EU.
The same thing happens if your business receives goods from a supplier in another EU country.
Your supplier also completes a similar sales list showing the value of the goods and/or services they've supplied to you.
Of course, the EU is actually trying to combat VAT fraud, that is what is meant by 'checking if VAT is dealt with correctly'. In their own words: 'The EU established the VAT Information Exchange System (VIES) to deter abuse of the zero-rate sales tax provisions for goods traded in the EU by EU member traders. Each Member State must collect and store specific information about traders and their trades'.
EU Sales Lists - the basicsThe EU Sales List (ESL) contains VAT details of each of your customers in the EU and the value (in CZK) of the supplies you've made to them in the period. If you haven't made any supplies (or issued any credit notes) you don't need to submit an ESL in that month / quarter.
Our accounting software will create this report automatically, and we will send it to the tax office.
Important: How to send EU Sales List to the tax officeReporting of EU sales can only be done in a special XML electronic format.
There are three ways to do this:
- using the datová schránka, or
- using special software and an electronic signature, or
- we will send it for you, but you must send in a paper authorisation to the tax office every time.
It is not possible that we use our own 'databox' for your documents, and therefore we use method 3 most often. It has proven to be the simplest and least error-prone.
Consequences for small businesses, especially consultants on a živnostenský listAs accountants we are not happy with this new EU directive, because small clients that used to have quarterly or even yearly accounting, are now forced to switch over to monthly or quarterly accounting, depending on what they sell / do.
This also applies to anyone who is a VAT-registered consultant, programmer or services provider with an EU-based company (usually they are also VAT-registered)
This means for both our client as for our accountants an increase in handling paperwork surrounding the actual accouting and therefore an increase in bookkeeping fees. Also there are fines for late filing, so each clients will require a much more strict mode of operation, that starts by the clients sending his documents in time, us doing accouting in a much smaller timeframe.
Steps to be taken in case of EU Sales
open and activate as soon as possible the datová schránkanot necessary anymore
- get of each customer his VAT number, and check it in the VIES system,
- accurately record all sales and credit notes to an EU customer each month / quarter.
- sending papers not later than the 10th of the following month, so we have 2 weeks for processing.