VAT Registration in Czech Republic - Updated for 2023
VAT in Czech Republic
Updated on Monday 10th July 2023 Rate this article
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Both local and foreign owners of companies in Czech Republic should be familiar with the VAT system available, as it applies to all products and services traded on the Czech market. Our Czech team of lawyers can assist persons who require an in-depth presentation on the VAT Registration in Czech Republic. They can also help foreigners start a business in Czech Republic.
| Quick Facts | |
|---|---|
| We offer VAT registration services | Yes |
| Standard rate | 21% |
| Lower rates | - 15% - 10% |
| Who needs VAT registration | Companies perfoming activities in Czech Republic |
| Time frame for registration | Around 2 months |
| VAT for real estate transactions | No VAT for the sale of apartments and commercial buildings |
| Exemptions available | Financial and postal services |
| Period for filing | Monthly or quarterly |
| VAT returns support | Yes |
| VAT refund | Non-EU companies can claim VAT refunds |
| Local tax agent required | Yes |
| Who collects the VAT | Czech government |
| Documents for VAT registration | - Articles of Association, - Certificate of Registration, - standard forms |
| VAT number format | Country code (CZ), followed by 8 digits |
| VAT de-registration situations | In the situation the company closes the activities or relocates |
| Threshold for VAT registration in Czech Republic | CZK 1,000,000 in taxable turnover |
| Voluntary VAT registration in Czech Republic | Businesses below the threshold can opt for voluntary VAT registration. |
| Compulsory VAT registration | Businesses exceeding the threshold must register for VAT in Czech Republic. |
| Types of VAT registration in Czech Republic | - standard VAT, - flat-rate VAT, - simplified VAT, - margin scheme VAT |
| VAT registration process | Application submitted to the tax authority (Financial Administration) |
| VAT payment period | Monthly, quarterly, or annually, depending on the business turnover |
| Intrastat reporting | Required for businesses trading goods with other EU member states |
| Electronic reporting (Yes/No) | Yes, VAT returns and related documents are submitted electronically. |
| VAT refunds for Non-EU businesses | Non-EU businesses can apply for VAT refunds through a separate process with the help of our Czech lawyers. |
| VAT compliance checks | Periodic audits and compliance checks may be conducted by the tax authority. |
| Distance selling threshold in Czech Republic | EUR 10,000 for distance selling of goods to consumers in other EU member states. |
| VAT group registration | It allows related companies to be treated as a single VAT entity. |
| Deregistration | Businesses can apply for VAT deregistration under specific circumstances with the assistance of our lawyers at Czech law firm. |
| VAT enforcement and appeals (Yes/No) | Yes, appeals can be filed against tax authority decisions. |
| VAT consultation | Our VAT consultants can provide guidance on complex VAT matters. |
Czech VAT registration for a foreign company
Czech VAT registration for a foreign company must comply with the applicable local legislation as well. Among the imposed formalities we mention:
- A fiscal representative is required for Czech VAT registration for a foreign company. One of our lawyers can use a power of attorney to represent you in this endeavor.
- The registration can also be done online if an electronic signature is available.
- In terms of documents, it is necessary to present the Certificate of Incorporation, VAT registration confirmation in the country of origin, plus information about the Czech bank account.
- We also mention that the authorities ask for a cover letter specifying the goals of the company, respectively the activities it will have in the Czech Republic.
We mention that Czech VAT registration for a foreign company can be ready in about 6 weeks, but for a simple and fast process, we recommend the services of our Czech lawyers with experience in this area.
How is the VAT registration for a local company in the Czech Republic?
Both foreign and local companies with activities in Czech Republic must consider registering for VAT payment. The company's documents must be submitted to the Czech Tax Authority, after which it will issue the VAT ID to certify the respective registration.
With the help of our specialists, you can be represented in front of the tax authorities, who can also take care of the translation of the necessary documents, as well as good communication with the respective authorities to benefit from a fast process for VAT Registration in Czech Republic.
VAT regulations in Czech Republic
The amended VAT legislation came into force from the beginning of 2015, bringing several modifications. Companies involved in radio and television broadcasting services, as well as those with operations in the field of telecommunications and electronics are now part of the Mini-One-Stop-Shop (MOSS), which refers to the fact that such companies are entitled to pay VAT in the country of the recipient of services.
More about the VAT Registration in Czech Republic can be discussed with our advisors.
VAT rates in Czech Republic
Companies with operations in Czech Republic are imposed with a 21% VAT rate, which is the standard rate applicable to most products and services, taxable under the current law, in 2023. Other types of business activities related to food products for children, various pharmaceuticals or book industry are taxed at a reduced rate of 10%.
Other services are taxed at 15% rate, if they refer to foodstuffs, water, public transportation, cultural and sports events, publishing industry or hotel accommodation; our team of Czech lawyers can offer more details on all the services and goods taxed at a VAT of 15%. The following goods and services are subject to 15% VAT rate:
- non-alcoholic beverages, medical equipment for disabled persons;
- cleaning services for private households, shows, and amusement parks;
- firewood, particular pharmaceutical products, the use of sporting facilities;
- domestic waste collection, treatment of wastewater, some domestic passenger transportation.
E-books in Czech Republic, drinking tap water, draft beer, soft drinks, catering services, hairdresser services, and clothing and shoe repairs are subject to a 10% VAT rate. This rule was implemented in May 2020. The same rate applied later on that year for admission to cultural events and hotel accommodation.
One of our Czech attorneys can tell you more about the VAT tax rates applicable in Czech Republic and about the VAT Registration in Czech Republic. You can also watch the video presentation we have prepared for you:
Tax compliance for Czech legal entities in 2023
Czech companies are required to register for VAT purposes. Newly incorporated companies receive a VAT number, which, in Czech Republic, is comprised of 10 characters, set out by the following formula: CZ + eight digits. As a general rule, companies have to comply for VAT returns purposes on a monthly basis, but the local legislation prescribes quarterly reporting if the turnover did not exceed CZK 10 million.
Quarterly reports are not allowed in the first two financial years. Monthly reports have to be submitted no later than the 25th day of the month. It is important to know that the Czech legislation does not require annual fillings. After the company was registered for VAT, the investor will have to respect the accounting requirements (bookkeeping, invoice regulations). Companies in Czech Republic are subject to the following local VAT accounting requirements:
- Companies must issue invoices for the goods and services offered for sale purposes in Czech Republic.
- The maintenance of the accounting records must be made for at least 10 years.
- Corrections and credit notes need to be made if invoice modifications are necessary.
- Invoices comprising VAT information must respect the Czech VAT Act.
Instead of dealing with the rules and conditions imposed for VAT Registration in Czech Republic, you should talk to one of our Czech lawyers and ask for complete legal advice. We are at your service if you are interested in opening a business in Czech Republic.
In the Czech Republic, the exports are exempt from VAT with a credit, alongside other suppliers like financial and insurance services, health and welfare, education, and lease of real estate.
Who must pay the VAT in Czech Republic?
The VAT registration must be done by companies importing goods from the EU in the Czech Republic. Buying and selling products in this country are subject to VAT. The same tax rate is applicable to clients outside the Czech Republic who purchase products or services from this country. Intra-community acquisitions are also subject to VAT taxation. Companies having distance selling operations must align with the VAT requirements in Czech Republic.
Also, companies holding inventory with the purpose of distribution or sale of the stock must pay VAT. The admission for varied events in the Czech Republic must comprise the VAT rate. One should solicit information about the VAT in Czech Republic and respect the applicable legislation in this sense. Feel free to talk to one of our advisors and find out more about the VAT in Czech Republic.
The VAT taxpayers must provide detailed evidence of issued and received invoices. Such information is solicited by the Czech Financial Administration for comparison and transaction verifications with business partners. However, this kind of control statement does not substitute the VAT return obligation.
Registration for VAT in Czech Republic in 2023
The registration for VAT in Czech Republic can be made as soon as the company is incorporated in this country. The process is not complicated and the legal representative of the firm must commence the process with the entitled authorities. Among the needed documents for VAT registration in Czech Republic, we mention the Certificate of Incorporation of the company that comprises important information about the firm.
Also, specific forms need to be completed with the financial authorities, but for more details and in-depth support for registration, you can talk to one of our specialists. They can tell you more about the VAT rules for 2023. We present you other facts to consider about the VAT registration in Czech Republic, mentioning that one of our experts can help company owners by managing all the formalities:
- The VAT registration is imposed on companies exceeding the CZK 2 million turnover in one year.
- Voluntary VAT registration can be made even if the threshold is not exceeded.
- The Czech VAT registration is made in approximately 2 months. However, the process can speed up if all the documents are provided in time, helped by our specialists.
- DIC is the VAT number allocated to companies in Czech Republic. This code shows that the firm is registered for taxation in this country.
The VAT registration in Czech Republic can be handled in a professional manner by our advisors.
The VAT generalized reverse charge to be introduced
The Generalized Reverse Charge Mechanism on domestic supplies has been accepted by the financial authorities in the Czech Republic, mentioning that if approved by the European Commission, the mechanism will be soon introduced. This is considered an important anti-VAT fraud measure.
If at the moment the cash payment of VAT imposed on goods and services can be withdrawn for B2B transactions of more than EUR 17,500, the client can report the VAT input and output as a book-only entry for the VAT return. If this measure will be implemented, the Czech Republic will be the first country to introduce the Generalized Reverse Charge Mechanism or GRCM in the European Union.
Invoice content
The invoice provided after the sale of products and services in the Czech Republic must include the following information:
- Company name and business address.
- Tax ID number of the company.
- Unique identification number of the business.
- The type of products and/or services sold, as well as a short description.
- The price of the respective products and services, before VAT.
- The price of the respective products and services with VAT included.
- The total amount due.
There are specific programs and software with which companies can issue invoices. We remind you of the support of our Czech lawyers who can help you with the formalities for VAT registration in the Czech Republic.
What is Intrastat reporting in Czech Republic?
Intrastat reporting is mandatory for the movement of goods with partners from other EU countries. There is also a threshold set in this regard and it is CZK 12 million for imported and exported goods for a period of one year, and once exceeded, Intrastat reporting in Czech Republic is required. As you have to prepare a series of documents and assessments, as well as collaborate with the relevant authorities, we recommend you get in touch with our local lawyers for legal consultancy in the tax field.
Representation before tax authorities
There may be litigation cases referring to taxation and reclaiming Czech VAT for which specialist advice is needed. With the help of our Czech lawyers, the company you own can be represented before the tax authorities. They can request tax audits and ask a series of questions regarding VAT payments and more.
But in order to be prepared in this regard, we suggest you collaborate with our specialists to benefit from legal support and assistance in resolving disputes of this kind.
Reclaiming foreign VAT as a Czech company
VAT refund from another EU member state can be done if you have a company registered in Czech Republic. A VAT refund can be requested for accommodation, transportation, and the purchase of goods and services in another member state.
Making investments in Czech Republic
The Czech Republic is a destination appreciated by foreign investors who discover the potential of this country. Being one of the most developed countries in Europe, the Czech Republic already hosts an impressive number of companies with foreign capital, which benefit from a strong and protected business climate. Among the advantages offered we mention the affordable costs for the competitive labor force, the incentives for investments, the permissive legislation both for foreigners and for the local entrepreneurs, but also the advantageous taxation regime.
The tourism sector, the real estate field, the manufacturing, the agriculture, and the retail sectors are among the well-developed in the Czech Republic, and fields in which numerous investors generate large profits. The highly skilled workforce, the low operational costs, the stable economy, and the appealing tax structure also stand and the base of the decision of making investments in the Czech Republic. The following facts and numbers outline more the business direction in this country:
- around USD 155,024 million was the total FDI stock for Czech Republic in 2018;
- world Bank Ranked the Czech Republic 35th out of 190 economies in the world;
- the Czech Republic is considered the second largest FDI recipient in Central Europe;
- Austria, Germany, the Netherlands, and Luxembourg are the main investors in the Czech Republic;
- the visa scheme was introduced in 2018 for non-EU citizens who make investments of at least EUR 1.9 million.
FAQ about Czech VAT
1. What is the VAT rate in Czech Republic?
21% is the standard VAT rate in Czech Republic. This rate applies to most products and services available for sale purposes. The VAT rate of 15% applies to public transportation, water, foodstuff, hotel accommodation, cultural and sports events. A reduced VAT rate of 10% is imposed on different food products for children, and pharmaceuticals.
2. Who needs to register for VAT in Czech Republic?
Companies exceeding the threshold of CZK 1 million must be registered for VAT purposes in Czech Republic. The formalities of the registration for taxation in this country can be handled by our Czech lawyers. Both domestic and foreign companies must be registered for VAT in this country.
3. Is VAT necessary for operations within EU countries?
Yes, it is mandatory to register your Czech company for VAT before starting the activities, whether in the country or outside the borders. Moreover, the EORI number that comprises the VAT code is required for trading operations within the EU countries. You can solicit our legal advice on this topic.
4. Can the VAT registration be made online in Czech Republic?
Yes, there is the possibility of VAT registration online, helped by one of our advisors with experience in this field. All the formalities for registration can be attentively handled by us.
5. What is the format of the VAT number in Czech Republic?
The VAT number is formed of CZ, the country code, plus 8 digits. The financial authorities in Czech Republic issue the VAT number.
6. Is there a VAT number for international or intra-community transport?
No, the Czech Republic does not impose a VAT for such transport. We remind you that we can assist foreigners in VAT registration in this country.
7. How does a company comply with the VAT Registration in Czech Republic?
The VAT is normally mentioned by an invoice. There are different VAT rates for varied categories of products and services in Czech Republic.
8. What types of reports are required for VAT in Czech Republic?
According to the tax legislation in Czech Republic, there is no need for quarterly VAT reports for the first 2 years of the company. After this period, monthly reports are imposed, but no later than the 25th of each month.
9. Does a company needs to keep accounting records?
Yes, there is an obligation of keeping the accounting records for at least 10 years in the firm, if the company is not suspended.
10. How can a Czech lawyer help me with the VAT registration?
An experienced Czech attorney can help both local and foreign company owners properly register for VAT. Different requirements must be fulfilled, so an expert in the field is needed for VAT registration in Czech Republic, in compliance with the applicable laws.
Persons who need further information on the Czech VAT can address to our law firm in Czech Republic.
