In connection with legislative changes effective 1 January 2024, specifically the changes to VAT rates, situations arise in practice where a tax document for advance payment (TDA) is issued at a different VAT rate — or at multiple VAT rates — than the line items on the final invoice. This can result in an overpayment on those line items when there is a difference in VAT bases. In such cases, the application will respond by overwriting the VAT rates on the line items with the rate specified in the TDA that is generating the overpayment on the invoice, at the moment the overpayment begins to occur during deductions.
This article describes how to prevent this situation and how to proceed correctly in these cases.
In practice, this occurs for example when deducting TDAs on invoices that contain line items for rent/utilities/other services (21% VAT rate) and a line item for water and sewage (12% rate for 2024, but 10% VAT rate in 2023).
It is essential to follow the procedure below when entering line items on the final invoice.
If you have already recorded an invoice and discovered that the situation described above has occurred, it is best to delete both the TDA deductions and the line items on the invoice, and start entering them again from scratch following this procedure.
The following procedure always addresses differences in VAT bases, not total amounts including VAT.
Procedure:
The first step is to enter the line items for which the VAT rate has changed compared to the TDA and where the difference in VAT bases should generate an overpayment. If such line items exist on the invoice, enter them first and then perform the TDA deduction(s). If the deduction form(s) contain amounts in VAT rates other than the one you are currently handling, you must clear those amounts so that only the deduction required in this step is applied. Perform the TDA deduction(s). If the invoice does not contain any such line items, skip step 1 and proceed to step 2.
The second step is to enter the line items for which the VAT rate did not change in 2024 compared to 2023 and where the difference between the VAT base on the TDA and the VAT base of these line items on the invoice should generate an overpayment. Perform the deduction(s) at the applicable VAT rate. Again, skip this step if the invoice does not contain any such line items.
Next, enter the line items for which the VAT rate has changed and where the difference in VAT bases should not generate an overpayment. Perform the TDA deduction(s) for the applicable rate. If there are no such items, proceed to step 4.
In the final phase, enter the remaining line items — those for which the VAT rate has not changed and where the difference in VAT bases should not generate an overpayment — and perform the deduction of the remaining TDA amounts.
Note: These steps may be skipped, but their order must not be changed!
Note: VAT bases for line items with the same VAT rate must of course be summed when evaluating the entry of individual steps.
Note: This procedure applies to both received invoices and issued invoices.
Practical example:
Invoice before TDA deduction
TDA
Performing step 1.
The screenshot shows that the overpayment resulting from the differences in VAT bases is assigned the original VAT rate.
Performing step 2.
Performing step 3.
In this case, an overpayment on the TDA occurred for the line item with a changed rate — see step 1. If the VAT base on the TDA were lower, the final invoice after deduction would look like this:
Performing step 4.
Deductions of advance payment tax documents at the 0% rate
When deducting a TDA at the 0% rate, the deduction must be entered on the final invoice first (an overpayment is generated). The rule still applies that at final invoicing, only the difference in VAT bases is taxed, not the total amounts including VAT.
The procedure is illustrated with a model example:
In 2023
Advance payment made, for which a TDA was issued at the 0% rate — CZK 1,000.
In 2024
Advance payment made, for which a TDA was issued at the 12% rate — CZK 1,000 incl. VAT.
Advance payment made, for which a TDA was issued at the 21% rate — CZK 1,000 incl. VAT.
Final invoice with a line item at the 12% VAT rate — CZK 1,000 incl. VAT, and a line item at the 21% VAT rate — CZK 2,000 incl. VAT; total invoiced amount CZK 3,000 incl. VAT.
1. In the first step, add the deduction of the TDA at the 0% rate to the final invoice.
2. In the subsequent steps, proceed by evaluating each case as described at the beginning of this article. In the next step, add the line item at the 12% VAT rate.
3. We can now deduct the TDA at the 12% VAT rate.
4. Follow the same process for the line item and deduction at 21% VAT, and all deductions will then be complete.
5. The resulting form with the VAT summary
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