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Affecting both domestic and foreign businesses, a number of actions triggers the obligation to register for VAT in the Czech Republic. To provide a basic overview, our Czech experts prepared a comprehensive eBook on value-added tax. Find out more about VAT rates, registration of taxable persons, communication with local tax authorities, compliance and VAT return filing, VAT refund to EU member states or third countries and penalties.
The basic VAT rate in the Czech Republic equals 21%. A reduced VAT rate of 12% is applicable to specific goods, such as food and drinking tap water, special healthcare products or pharmaceutical products (incl. drugs and vaccines), public transportation, hotel accommodation, catering or entry to cultural and sport events.
The supply of goods to another EU member state is exempt from VAT, provided that:
The export of goods outside the EU is exempt from VAT, provided that:
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 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.
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.
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.
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.
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.
In the Czech Republic, local representation by a tax advisor is not obligatory.
In specific cases, foreign entities are very likely to use the services of a tax advisor.
In communication with the Czech tax authorities, only Czech language may be used.
A taxable person can communicate with the tax authorities in written form, verbally to the protocol or electronically via the data box.
The VAT return and EC sales must be filed electronically.
In the Czech Republic, the calendar month is considered as a tax period. A later change to calendar quarter is possible under specific conditions. The VAT return shall be filed until the 25th day following the respective tax period.
The EC Sales List shall be filed until the 25th day following the respective tax period which is in general a calendar month; eventually a calendar quarter.
Besides the VAT return, a control statement listing information from issued and received invoices must be filed as well.
The minimum amount to be refunded is EUR 50 for the respective calendar year. However, the VAT refund may be requested also for shorter periods than the whole calendar year, but such period may not be shorter than 3 calendar months while the value of VAT must exceed EUR 400.
The deadline for filing of the VAT refund request is September 30 of the subsequent calendar year. The request shall be filed with the local tax authority in the other EU member state where the claimant is established. The deadline for the return of claimed VAT is 10 working days after a decision on the VAT refund is issued. This decision is issued between 4 to 8 months after filing the VAT refund request.
VAT refund for a foreign taxable person is possible, upon the fulfilment of specific conditions.
Upon the fulfilment of specific conditions, including reciprocity (currently applicable to Switzerland, Norway, Macedonia, United Kingdom), VAT refund to third countries is possible.
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.
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: