The Court of Justice of the European Union (CJEU) issued several rulings during 2024 that fundamentally affect the interpretation of tax rules in the Member States. From January 2025, this case law is beginning to be reflected in the practice of Czech tax administrators and in the decision-making of domestic courts.

The common denominator of these judgments is the emphasis on the real economic content of transactions and the rejection of purely formal constructions that aim to obtain a tax advantage without the corresponding substance.

VAT and chain transactions

At the end of 2024, the CJEU repeatedly addressed the issue of chain supplies and the determination of so-called variable filling. The court emphasized that it is not only the formal setting of contractual relations that is decisive, but the actual arrangement of transport and the economic role of individual entities.

For the exemption from VAT on intra-Community supplies, it is necessary to prove the actual movement of goods between Member States. The mere existence of invoices or framework contracts is no longer sufficient if they are not supported by real transport and logistics documents.

Economic activity and passive income

Other CJEU rulings concerned the definition of the concept of economic activity for VAT purposes. The court confirmed that the passive possession of assets or the collection of income without active involvement does not constitute an economic activity giving rise to the right to deduct VAT.

Holding companies and investment firms must therefore be able to demonstrate that they perform effective management, administrative or support functions. Mere ownership of shares or collection of dividends is no longer sufficient in itself.

Digital services and cross-border taxation

In 2024, EU case law has also had a significant impact on the digital economy. The CJEU confirmed that the place of actual consumption is decisive for electronically supplied services, not the registered office of the provider.

For Czech businesses, this means an increased risk of VAT assessments in cases where they cooperate with platforms outside the EU or use complex digital distribution models.

Direct taxes and abuse of law

In the area of direct taxation, the CJEU reiterated the prohibition of abuse of tax advantages. If the structure lacks economic sense and its main objective is to obtain a tax advantage, Member States may refuse to apply the exemption, even without explicitly infringing the law.

This approach has a direct impact on holding structures, licensing schemes and intra-group financing.

Practical impacts for 2025

From 2025, we can expect:

• A more thorough investigation of chain transactions and the transport of goods;

• higher requirements for proving the substance of holding companies,

• stronger access to digital and cross-border services;

• more frequent questioning of structures based only on formal settings.

Recommendations for practice

Companies can be recommended:

• review intragroup and cross-border transactions;

• align the contractual documentation with the actual functioning of business relationships,

• strengthen the records of transport and logistics documents,

• rethink holding structures from the perspective of real substance.

Conclusion

The CJEU's case law from 2024 sets a clear trend for 2025: tax benefits will only be recognized where there is real economic content. Formal documentation will no longer be enough for Czech companies – the ability to prove the actual functioning of transactions will be crucial.