According to the Act on Cash Registers, all persons operating retail trade (including internet traders) should ensure the recording of payments in accordance with this Act, by 1 January 2007 at the latest (the planned amendment includes an extension of this deadline by one year). However, in preparing the Act on Cash Registers, the existence of online sales was somehow overlooked. The Act does not take into account mail-order sales at all, which in some cases precludes its meaningful interpretation in relation to internet traders. The Association for Electronic Commerce (APEK) representing internet sellers has requested the Ministry of Finance on several occasions for a statement on the situation that has arisen; unfortunately, it has not yet received a qualified opinion. The Act on Cash Registers (No. 215/2005 Coll., as amended) according to its Section 1 regulates “the method of recording payments maintained by natural persons and legal entities in operating retail trade…on the basis of a trade licence…and regulates other obligations related to the recording of payments, for the purposes of correct and complete identification and determination of tax obligations in the exercise of tax administration.” Mail-order sales by internet traders fall within the category of retail trade, and they are therefore not excluded from the scope of the Act on Cash Registers (unlike so-called door-to-door sellers). Only B2C relationships therefore fall within the scope of the Act.

Entities subject to the Act on Cash Registers (thus including internet traders) are obliged to record individual payments by means of a cash register. Here appears the first problem, namely what is meant by payment under the Act on Cash Registers. The definition of payment is contained in its provision Section 2 letter k). Payment means “receipt or expenditure of banknotes and coins of Czech or foreign currency and payments made by means of an electronic payment instrument, a security or a cheque, in operating retail trade…” Receipt and expenditure of banknotes and coins of Czech or foreign currency presumably does not need commentary and it is possible to state that the recording obligation under the Act relates to payments in cash (in the case of personal collection of goods or their delivery by the trader). However, the recording obligation also apparently relates to cash payments in the case of so-called cash on delivery, where the cash is not physically received by the trader but by another person, for example on the basis of a forwarding contract (see below).

However, the recording obligation also relates to payments made by means of an electronic payment instrument. What an electronic payment instrument is is defined by the Act on Payment Transactions (No. 124/2002 Coll., as amended) in its provision Section 15 paragraph 1. An electronic payment instrument is: a) a means of remote access to monetary value, the use of which typically requires identification of the holder by a personal identification number assigned by the issuer or identification by another method, b) an electronic money instrument.

Particularly interesting is the above point 15 paragraph 1 letter a) of the Act on Payment Transactions. According to the interpretation of the Czech National Bank, means of remote access to monetary value in practice include primarily debit and credit payment cards with electronic function and elements of direct banking (e.g. homebanking, telephone and internet banking). From this it follows that in some cases even payment by transfer to an account, and paradoxically according to the form of access to the account which the purchaser chose in a particular case, would be subject to the recording obligation under the Act on Cash Registers. If a customer pays by “ordinary” transfer to an account, this is not a payment made by means of an electronic payment instrument and such payment is not subject to recording under the Act on Cash Registers. Conversely, if the payment order is given by remote access (e.g. via the internet), it is necessary to record such payment. It is probably unnecessary to emphasise that the fact of how the customer gave the payment order is not always ascertainable on the part of the trader. Regarding which payments made by means of an electronic payment instrument are subject to the recording obligation and which are not, the opinion of the Ministry of Finance will of course be particularly important; however, the Act makes no exceptions in this sense.

We encounter further difficulties in interpreting the provisions which regulate the individual obligations that should be fulfilled by internet traders on the basis of the Act on Cash Registers. Provision Section 3 paragraph 1 of the Act on Cash Registers states: “The obliged entity records individual payments by means of a cash register, which it places in each payment point. The obliged entity issues and hands over to the customer with whom it makes a payment a cash register receipt.” A payment point according to Section 2 letter n) of the Act is “every place where payments are made at a sales point in retail trade…” The Act does not contain a definition of what is meant by a sales point.

With the awareness of imprecision, it might perhaps be possible for simplification to adopt an interpretation that the payment point within the meaning of the Act on Cash Registers is, in the case of non-cash payments (payment cards, payment gateways, GSM banking, transfer to an account via internet banking), the place where the trader’s server is actually located. In such a case, together with the ordered goods, it would be possible to send to the customer and subsequently hand over the required cash register receipt. In this connection we mention that the cash register receipt must be in printed form - see Section 2 letter m) of the Act on Cash Registers - a cash register receipt is “the original document on performance, i.e. sale of goods…printed by the cash register”. The Ministry of Finance provided the Association for Electronic Commerce with an unofficial statement containing information to the effect that in the case of non-cash payments outside the trader’s establishment there is no payment point and payments need not be recorded by a cash register at all. What this argument by the Ministry is based on was unfortunately not stated; however, it does not correspond to the above-mentioned provisions of the Act on Cash Registers.

In the case of cash payments (including payments on cash on delivery), the situation is of course different, because the payment point in this case is certainly the place where the payment is made (thus for example at a post office or at the customer’s premises). The fact that the contract was concluded, for example, via a web interface, is not decisive in relation to the definition of payment point. In the case where the trader is paid directly at his establishment, the situation is not problematic and the trader places a cash register in his establishment.

In cases where direct contact with the customer and the actual collection act takes place outside the establishment, the situation is more complex, whether payment is received by the trader himself (the trader does not use other entities for these services) or payment is received by the forwarder or carrier of the goods. At the payment point, payment should be recorded by means of a cash register and the customer should be issued with a cash register receipt; however, these obligations cannot be fulfilled without a cash register located at the payment point. The collecting person would have to be possibly equipped with a so-called portable cash register (defined as a cash register without determination of a fixed payment point), but the Act on Cash Registers permits the use of a portable cash register only as an exception, namely for entities which operate “their activity in a stall, a stall selling daily press or a stall with refreshments, defined by a special legal regulation governing consumer taxes, in a simple structure, at a counter, table or other similar facility which are intended for the sale of goods or provision of hospitality services”. A portable cash register within the meaning of the Act therefore cannot be used for these purposes.

In cases where an internet trader uses third parties for delivery of goods, it is possible - in relation to the trader’s recording obligation (and obligation to issue a cash register receipt) - to attempt to appeal to common sense. Even in this case it is not possible to satisfy the recording obligation under the Act. Apart from the impossibility of using a portable cash register, it also plays a role that the forwarder or carrier delivers for multiple entities (e.g. multiple internet traders) and would thus have to be equipped with the cash register of the individual entities for whom he delivers. In support of this “reasonable” interpretation, i.e. that these cases do not fall within the scope of the Act on Cash Registers, the following arguments can also be given: a) neither the forwarder nor the carrier operates retail trade and is therefore not an obliged entity under the Act on Cash Registers, b) the purpose of the Act is the recording of payments in operating retail trade and not the recording of payments in collecting amounts for other entities, c) in the case of a forwarding contract, the forwarder acts in his own name for the account of the principal, so does not appear vis-à-vis the customer as a representative of the internet trader. It is of course a question whether such an interpretation will appeal to the Ministry of Finance. However, this argumentation cannot be used in the above-mentioned case where the trader delivers independently.

For the practice of internet traders, the decisive factor is of course the interpretation of the Act on Cash Registers carried out by the Ministry of Finance; however, even this interpretation cannot (should not) be in conflict with the wording of the Act. The best variant which would resolve the problems outlined above appears to be a legislative change which would already take into account the existence of mail-order sales. We would very much welcome all information, experience and suggestions on how to satisfy the conditions of the Act on Cash Registers in the practice of mail-order sales in the discussion.

This text was translated from Czech to English using an AI translator.