Czechia VAT guide
Czechia VAT guide for businesses
Valued Added Tax (VAT) in Czechia (Czech Republic) was introduced in 1993 and is directly administered by the Ministry of Finance. The local name of the VAT is Daň z přidané hodnoty (DPH), while its legislative framework is mainly included in two Acts:
a) Act No. 235/2004 (VAT Act), which consist of the basic definitions, registration rules, taxable transactions, exemptions and many other important information.
b) Act No. 280/2009 (Tax procedural code), which regulates the procedural side of tax law (e.g. tax audit process, registration procedure, penalties and others).
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What is the Standard VAT (TVA) rate in Czechia?
21%
In Czechia, the standard rate of VAT is 21%. This is applicable for the supply of goods or services, which are not subject to a reduced rate of VAT.
Reduced VAT rate: 12%
A new reduced VAT rate of 12% in the Czech Republic, which will abolish the reduced VAT rates of 10% and 15% in the country.
Requirement to register for VAT
Established entities: Taxable person that has its seat, place of business or fixed establishment in CZ is obliged to register for VAT, if its threshold exceeded a turnover of CZK 1,000,000 within 12 consecutive calendar months. Such entity is obliged to submit a registration form by first day of the second month following the month in which the threshold was reached.
Non-established entities: Non-established entity is obliged to register for VAT upon performance of the 1st supply in Czechia, within 15 days since the 1st supply took place.
When does VAT liability apply?
VAT (or DPH) Liability applies to the following transactions:
- Local supply of goods or services for consideration by a taxable person acting as such (including transfer of real estate)
- Intra-Community acquisition of goods by a taxable person for consideration
- Intra-Community acquisition of goods by a legal entity, which was not established for a business purpose
- Acquisition of new means of transport from another EU Member State for consideration by a non-taxable person
- Importation of goods
Invoicing requirements in Czechia
An invoice must contain the following particulars:
- The VAT identification number of the person that carries out the transaction
- The designation of the person for whom the transaction is carried out
- The VAT identification number of the person for whom the transaction is carried out
- The registration number of the tax document
- The scope and subject of the transaction
- The date of issuance of the tax document
- The date of transaction or the date of receipt of consideration, if the obligation to account for VAT or the chargeable event as of the date of receipt of consideration, if different from the date of issuance of the tax document, occurred before the transaction
- The unit price without VAT and the discount, if the discount is not comprised in the unit price
- The taxable amount
- The rate of VAT
- The amount of VAT; the amount of VAT shall be stated in the Czech currency
- A reference to the relevant provision of this Act, provision of the relevant regulation of the European Union or another information stating that the transaction is exempted from VAT, if the transaction is exempted from VAT
- Issued by the customer; if the person for whom the transaction is carried out is authorised to issue the tax document
- VAT to be levied by the customer; if the person obliged to account for VAT is the person for whom the transaction is carried out
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Returns and deadlines
The periodic VAT returns and payments shall be calculated and paid every month or, in some cases, every quarter.
Quarterly returns
In case of a new VAT registration a monthly frequency is mandatory. Taxpayer is eligible to change a filling frequency from monthly to quarterly, if the following conditions are met:
- After more than 12 months since the end of month, in which the VAT registration occurred
- In the respective period (12 months) the taxable person did not reach a turnover of CZK 10,000,000.00,
- It is a reliable VAT payer
- It is not a VAT group
- The change request must be indicated in the December VAT return.
Monthly returns
Taxpayer is obliged to submit the applicable VAT returns by the 25th day of the month following the relevant periods. If the deadline falls to weekend or a bank holiday, the taxpayer is obliged to submit the VAT return on the next working day at the latest.
In addition a taxpayer is also obliged to submit other VAT related reports. Both VLS and ESL are due by the 25th day of the month (similarly as the VAT return).Heading..
VAT ledger statement (VLS)
Which represents a line-by-line report and contains all the VAT related transactions, which were performed during a month (e.g. domestic sales and purchases, intra-Community acquisitions and others).
The submitted VLS is automatically crosschecked by the Tax Authorities and any kind of discrepancy is questioned by the officers in charge, i.e. transactions reported by the supplier must be reported with the same information by the customer.
EC sales list (ESL)
In the case if it performed intra-Community supply of goods or services.
Submission
Both paper and electronical submission of the VAT return and other related reports are possible. For the e-submission of the returns a taxpayer must posess a hard token or e-filling account, which contain a valid electronic signature of the taxpayer.
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