Legal news Deloitte Czech Republic. June 2017

Transcription

1 Legal news Deloitte Czech Republic June 2017

2 Legal Services cannot do without 2 As innovative technologies are developed, the provision of legal services will no doubt undergo fundamental changes in the next few years, including the manner in which the legal profession is performed. The fundamental changes will be brought not only by new technologies automating the creation and management of legal documents and the automated use of data contained in public registers, but also the more frequent adoption of an interdisciplinary perspective in making individual transactions. Take a real estate transaction where part of due diligence will be undertaken by the seller authorising the buyer to gain access into a public cloud system relating to the seller s property where all the important information acquisition titles, encumbrance, permits, contracts and other relevant documentation is stored. Automatically, without scanning and without the need for a virtual data room. Let us go further and picture that all data in the public cloud are automatically integrated in contractual documentation: no transcribing from title deeds, only a couple of clicks and the data needed are in the model contract. A petition to authorise a title or record in the public, e.g. land, register? No copy + paste, only a click and all the data from the contract are integrated in the petition. The land register has authorised the title and you subsequently wish to rent out the property? There is nothing simpler. In a matter of clicks, the data from the purchase contract will be transferred to a draft lease contract and simultaneously compared with their status in the land register or verified in terms of how customary the rent amount is using other available databases, which are already being developed, in conjunction with our price maps used to determine and compare the prices of individual real estate transactions, namely apartment prices in individual locations, in respect of which demand is the highest. Similarly, individual simpler valuations, assessments and other documents necessary for real estate transactions may be efficiently generated in an automated way. Do you find this too futuristic? Are you concerned that public registers will be unable to respond to the requests of the advisors involved fast enough in terms of automation and data sharing? Luck favours the prepared and we are already working on solutions that will turn a substantial part of the above mentioned

3 3 visions into reality, using this to make quality legal services available to the general public at a corresponding price. All this will be possible thanks to technologies, namely in industries in respect of which customer demand is the highest. Gradually, it will be possible to implement individual visions in other legal segments as well. Olga Kaizar okaizar@deloittece.com

4 to a foreign account in practice 4 In an effort to combat tax evasion, the VAT Act introduced a rule in 2012 under which the recipient of a taxable supply serves as a guarantor for the VAT not paid by the supplier also in circumstances where the payment was made on a cash-free basis to an account held outside the Czech Republic (irrespective of whether the country was an EU member state or a third country). This guarantee was not founded upon the principle of guilt. The taxable entity had no possibility whatsoever to refute the assumption that it engaged in a fraudulent transaction. However, as stated by the Regional Court in Ostrava, this procedure runs counter to the case law of the Court of Justice of the European Union (CJEU). In its ruling (22 Af 102/ ) the Regional Court in Ostrava has stated that a payment made to a foreign account cannot in and of itself trigger the outstanding VAT guarantee obligation. EU case law The CJEU has concluded in its rulings that while the EU VAT Directive makes it possible for EU member states to take measures based on which the taxable entity is a guarantor for the payment of an amount arising from VAT payable by another entity determined as a tax debtor, this treatment must be subject to compliance with, inter alia, the principle of proportionality. This principle sets out that the measure must not go beyond what is necessary to achieve the stated aim. Czech regulation in conflict The Regional Court in Ostrava ruled as disproportional the situation where the legal assumption that the taxable entity became a guarantor was stated in a manner that made it impossible to use any evidence to refute the fact that the taxable entity knew or should have known at the date of a transaction made in its favour that VAT would remain outstanding. Ultimately, this system led in practice to liability without guilt which the CJEU believes is not necessary to protect public budget payments. Taking into account the argumentation outlined above, the Regional Court in Ostrava has concluded that the relevant provision of the VAT Act is in conflict with the above case law and hence EU law since it is not based on the principle of guilt, not making it possible for the guarantor to unburden himself from the liability for VAT unpaid by the tax debtor by presenting evidence that he is not in any way connected with the dealings of the tax debtor and acted in good faith. Alena Dugová adugova@deloittece.com

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