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Since 2004 the Czech Republic has come within the European Union VAT regime, and is part of the EU single market economy. VAT, or DPH, was first introduced into the old Czechoslovakia in 1993. VAT Directives, issued by the EU, lay out the principles of the VAT regime to be implemented by each member country. These Directives take precedent over the local legislation.
Click here for free guidance on Czech VAT registration and returns - including fiscal representation
CZECH VAT Law
Czech VAT is supervised by the local tax office, Financni Urad.
CZECH VAT Registration
Both EU and non-EU Foreign companies may register for VAT in the Czech Republic without the requirement to establish a local company or form a permanent establishment – known as non-resident VAT trading. There is no VAT threshold in Czech Republic for the registration of non-resident traders – a VAT number must be in place before the commencement of taxable supplies. There is some limited flexibility for reclaiming Czech VAT incurred prior to the registration, but potential fines can be high.
There are strict rules on the situations where a registration is permitted. Common scenarios which require a Czech VAT registration include:
- Importing goods into the Czech Republic;
- Organising live events, conferences etc in the Czech Republic;
- Selling goods from the Czech Republic to other EU countries; and
- Distance selling to private individuals living within the Czech Republic, e.g. internet sales.
Registering for Czech VAT generally takes 3 weeks, although this can vary.
Click here for free guidance on Czech VAT registration
CZECH VAT Compliance
There are detailed rules controlling the recording and processing of Czech transactions. These include guidelines on:
- Czech invoice requirements, including electronic invoices;
- Foreign currency reporting and translation;
- Correcting errors from prior returns;
- Credit notes and corrections; and
- What accounting records must be maintained.
In the Czech Republic, there are strict rules on the layout and format of VAT records to be kept by companies or their tax agents.
CZECH VAT Rates
The standard VAT rate in the Czech Republic is 20% since 1 January 2010. There is a reduced rate of 14% on food, books and the supply of some services. A number of services are exempt from Czech VAT, such as financial and postal services.
April 2012 - 1% Value Added Tax rise in Czech Republic
There are many variations to the rates above, including exempt taxable supplies. Please contact us to learn more:
enquiries@tmf-vat.com
CZECH VAT Returns
Companies with a Czech VAT number must submit periodic payments. Generally, filings and payments are submitted quarterly in the Czech Republic. Any Czech tax credits should be paid within 30 days, but typically take much longer.
CZECH Intrastat
In addition to VAT returns in the Czech Republic, companies may be required to submit additional statistical information.
Czech Intrastat, which lists sales (dispatches) and purchases (acquisitions), within the EU region, must be filed monthly once the annual threshold is exceeded.
Click here to check current Czech Intrastat thresholds.
CZECH VAT Refunds
If a foreign company is providing taxable supplies in the Czech Republic, but unable to obtain a Czech VAT number, or simply incurring Czech VAT on local goods or services, then Czech VAT may be recovered through a VAT reclaim.
From the 1st of January 2010, VAT refund applications are made through the Tax Authorities of the applicant’s home country.
Click here to be put in touch with our Czech VAT team for free guidance.
TMF has offices in Prague as well as 35 other offices in Europe and 87 worldwide. For enquiries about our international VAT services, please contact our UK global co-ordination centre:
enquiries@tmf-vat.com
+44 (0)870 067 8881
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