VAT in the Czech Republic | eBook

Basic and reduced VAT rates

The basic VAT rate in the Czech Republic equals 21%. A reduced VAT rate of 15% is applicable to specific goods, such as food and non-alcoholic beverage items, plants, special healthcare products or pharmaceutical products. A 10% VAT rate applies to another selection of goods and services, such as infant nutrition, drugs, vaccines, books, drinking water and sewer rates, public transportation, hotel accommodation, catering, entry to cultural and sport events, minor repairs or hairdressing services.

Supply of goods within and outside the European Union

The supply of goods to another EU member state is exempt from VAT, provided that:

• The goods are physically delivered to another EU member state
• The goods are transported by a supplier, customer or third person on their behalf
• The customer provides valid EU VAT ID number for intracommunity purposes
• The transaction is reported in EC Sales List

The export of goods outside the EU is exempt from VAT, provided that:

• The goods are physically transported to third country by supplier or customer
• The supplier has confirmation of custom authorities or other documents confirming export from the EU

Taxable amount

The taxable amount equals the total amount that was received or shall be received for a taxable supply, including any excise duties, however, it does not include the value added tax.

Voluntary and obligatory registration

Voluntary VAT registration is possible, but only for a taxable person. However, if the turnover threshold reaches CZK 2,000,000 within any 12-month period, registration for VAT becomes obligatory.

The due day to file the obligatory VAT registration falls on the 15th day of the calendar month following the calendar month in which the turnover threshold has been reached.

Group registration for taxable entities

In the Czech Republic, taxable entities who have their seat, place of business or fixes establishment within Czech territory and are financially, economically, and organizationally connected, may participate in group VAT registration, and therefore be considered as a single taxable person for VAT purposes.

Other specifications of the VAT registration

In case a taxable person does not fulfil the obligation to register for VAT, the tax authority is entitled to do so ex officio.

Besides the obligatory registration, Czech taxable entities must register for VAT for intra-community purposes in case of service provision to another EU member state or in case of acquisition of goods or services from another EU member state.

Definition of foreign taxable persons

Foreign taxable persons are entities without seat or fixed establishment located in the Czech Republic, who realize the delivery of goods or service provisions subject to Czech VAT obligations.

Obligatory registration for foreign taxable persons

Foreign taxable persons are obliged to register for VAT in the Czech Republic in case they deliver goods or provide services subject to Czech VAT obligations (except when the recipient is obliged to pay the tax) as well as in case of acquisition of goods from other EU member states.

For distance sales the threshold for the relevant transactions (distanced sale of goods and provision of telecommunication services, radio and television broadcasting services and electronically provided services to a non-taxable person), did not exceed EUR 10,000 (approx. CZK 256,000) in the relevant and the immediately preceding calendar year. Alternatively, a single EU VAT return submitted in the OSS (One-Stop Shop) scheme will be an option.

The electronic portal businesses (often participants of distanced sales of goods) selling imported goods to buyers in the EU, might, since 1 July 2021, instead of making the buyer pay the VAT as of import of the goods into the EU, declare and pay the VAT to the tax authorities in IOSS (Import One‑Stop Shop) scheme.

VAT refund conditions

Upon the fulfilment of specific conditions, including reciprocity (currently applicable to Switzerland, Norway, Macedonia, United Kingdom), VAT refund to third countries is possible.

Minimum amount and applicable period for VAT refund

The minimum amount to be refunded is CZK 1,000 for the respective calendar year. However, the VAT refund may be requested also for shorter periods than a whole calendar year, but such period shall not be shorter than 3 calendar months and the value of VAT must exceed CZK 7,000.

Deadline and place of filing for VAT refund

The deadline for filing a VAT refund request falls on June 30 of the subsequent calendar year. The request shall be filed with the Tax office in Prague, Czech Republic. The deadline for the return of claimed VAT is 6 months after filing the VAT refund request.

Depending on the specific situation, following penalties can be imposed in case of VAT non-compliance:

• Fine up to CZK 300,000
• Late payment interest that is calculated as the National Bank’s repo-rate (currently 7 %) increased by 8 %
• Penalty in the amount of 20 % of the assessed VAT amount