Czech News - Nov 96 - VAT On Swaps And Forward Transactions

Although the Ministry of Finance earlier announced that, according to the D-130 Decree, not only securities-trading but also trade related currency hedging transactions are considered VAT exempt supplies, this view was subsequently changed. A new Ministry of Finance opinion in respect of derivatives was published. According to this, only trading with derivatives will be considered a taxable supply and, as trade related hedging is not itself trading in derivatives, it will not be regarded as taxable supply.

This issue is significant to Czech VAT payers, as the partial exemption system effectively allows reclaims of VAT only prorata based on levels of normal VAT supplies compared to total supplies, the latter including exempt supplies.

The content of this article is intended to provide a general guide to the subject matter. It is therefore not a substitute for specialist advice.

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