top of page
n6s0tk9ykvtrnwvbba7f.jpg

SHARE:

A Complete Guide to Czech Republic VAT

December 22, 2022

The VAT statute has been the primary source of Czech VAT law since 1994. These are the most important pieces of legislation on value-added tax that have come out of EU directives. 

Being a part of the EU means that the Czech Republic will follow all regulations. Specifically, these regulations govern VAT registration, reporting, and compliance in the Czech Republic. The Finance Tax Authorities and the Czech Ministry of Finance enforce the VAT Act.

  • LinkedIn
  • Instagram
  • Facebook

When do you register for VAT?

In the Czech Republic, VAT is charged on the following types of businesses:

  • The exchange of money for products and services rendered by a resident of the Czech Republic

  • Transportation of commodities from a foreign nation to the Czech Republic (non-EU Member State)

  • Any taxable individual who buys Czech-made products in the European Union

  • intra-community delivery of services in the Czech Republic

Foreign Companies

 

A non-established taxable person is required to register as a VAT payer if one of the following requirements is met:

 

  • The non-established person produces taxable supplies or renders services with a location of supply in the Czech Republic, except for supplies subject to the local reverse charge system.

  • The non-established individual delivers commodities from the Czech Republic to another EU member state.

 

Any foreign firm selling products or services on the Czech market must register for Czech VAT to combat tax evasion. As a member of the European Union, the Czech Republic, like other EU nations, requires VAT registration under the transactions below:

 

  • Shipment or acquisition of goods from other EU nations

  • Importation of goods into Czech Republic territory

  • Every commercial transaction in the Czech Republic

  • Selling of products to local buyers in the Czech Republic based on consignment storage arrangements

  • Exhibits, conferences, live performances

  • Delivery of goods at the shipper's expense

Certain business-to-consumer services are considered supplied at the location of the client's residence or domicile, even if the customer is located outside the European Union.

  • When a client from a non-EU nation uses and benefits from a Czech VAT payer's services in the Czech Republic, the location of the supply of such services is moved to the Czech Republic. Any Czech-based taxable person who completes the following criteria must register as a VAT payer.

  •  In the previous 12 calendar months, the entrepreneur had a turnover of more than CZK 1 million. On the first day of the second after the month the threshold was crossed, the entrepreneur is considered an effective VAT payer.

  • A business offers services with a location of supply in the Czech Republic, or it engages in long-distance sales to the Czech Republic with a place of supply inside the country through its foreign VAT establishment.

  • An entrepreneur engages in activities such as purchasing property based on the transfer of a continuing concern from a VAT payer or taxable person who becomes the successor company in an organizational transformation in which the company that is dissolving is a VAT payer.

What are the Czech VAT rates?

Companies that fail to apply the correct VAT rates on invoices from the Czech Republic will be liable for the difference, fines, and interest. The Czech government determines the VAT rates, which adhere to the basic guidelines for applying the standard and reduced VAT rates.

Current interest rates are:

  • Standard VAT rate of 21%

All taxable products and services are typically charged at the regular VAT rate of 21%. Food, non-alcoholic beverages, water, handicapped medical equipment, kid car seats, a percentage of domestic passenger transport, entrance to cultural events, performances, amusement parks, and sporting events, assistance for artists, social housing, reconstruction and repair of private residences, and services for artists like musicians are all eligible for the reduced VAT rate of 15%.

  • Reduced VAT rate of 10%

Some goods (including some gluten-free and baby food options), newspapers, periodicals, and some medications and books are eligible for the reduced VAT rate of 10%.

  • Zero percent VAT rate

Transactions involving supplies between members of the same economic community and international transit are subject to a zero percent value-added tax rate.

  • Exempted Activities

The following are examples of transactions that are exempt from VAT without the ability to deduct the input tax:

  • Postal services, sale of postage stamps, broadcasting, insurance activities, sale of real property, and financial services.

  • Education.

  • Medical services and delivery of medical goods.

  • Operation of lotteries and gambling, social assistance, and supply of used goods.

 

Other VAT-exempt activities include delivery of products to and purchases of goods from another EU member, services with implementation in a non-EU country, transport and services directly related to the import and export of goods, passenger transport, and transportation of goods.

When to File for VAT Returns

Periodic VAT returns must be submitted electronically to the Czech VAT tax authorities by the 25th day of the month succeeding the tax period (month or quarter) to which they apply.

Every month, you must file Czech VAT Control Statement by the 25th day after the end of the month.

According to the VAT guidelines, the tax term for each EU member should be one, two, or three months. The VAT return must be filed by the EU member's designated date.

How to Register for VAT Return

Contact us for a free consultation if you want help registering for Czech VAT or are unsure whether you are required to register.

 

Before we begin the registration process, you must gather the following documents:

  • A section of the Commercial Register

  • Confirmation or information regarding your VAT registration in your state or country

  • Verification of the bank account

  • Cover letter stating your intent to continue or start your business activities in the Czech Republic

  • Additional documentation, as necessary.

 

Tax authorities usually take about three to six weeks to complete a VAT registration. Usually, the tax authorities have additional questions during the VAT registration process. Also, there is more to do when you register. The business is responsible for fulfilling subsequent duties, such as submitting Czech VAT returns, Intrastat reports, and customs declarations regularly.

bottom of page