VAT GUIDE IN CZECH REPUBLIC
CZECH REPUBLIC VAT GUIDE FOR BUSINESSES
Value Added Tax (VAT), known in Czech as “daň z přidané hodnoty (DPH)”, is a key component of the Czech Republic’s tax system and is governed by the Czech VAT Act, in alignment with the EU VAT Directive.
Businesses that exceed a turnover threshold of CZK 2 million (approx. EUR 80,000) in 12 consecutive months must register for VAT. Foreign businesses may also be required to register if they carry out taxable transactions in the Czech Republic.
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VAT Rates
Who Needs to Register for VAT?
There are two types of VAT registrations:
VAT Payers – Fully VAT-registered persons/entities.
VAT-Identified Persons – Entities registered only for specific transactions under EU rules (not full VAT payers).
VAT Payer Registration (Czech-established persons):
Mandatory if annual turnover exceeds CZK 2 million.
Registration takes effect: From January 1 of the following year, or the next day after exceeding CZK 2 million, if applied for timely.
Automatically if turnover exceeds CZK 2,536,500 in a year.
Application must be filed within 10 working days after exceeding the threshold.
Also required when:
Providing certain taxable services or goods in the Czech Republic.
Acquiring a business or becoming a successor company via transformation.
VAT Obligations
A taxable person is any individual or entity carrying out economic activities independently. This includes non-business legal entities if they engage in taxable activities.
Issuing VAT-Compliant Invoices: In the Czech Republic, VAT-compliant invoices must include the supplier’s and customer’s VAT numbers, the invoice number and issue date, the date of supply, a description of the goods or services provided, the applicable VAT rate and amount, the total amount payable, and a reverse charge note if applicable.
Filing VAT Returns
VAT Control Statement (Kontrolní hlášení) :Required monthly (or quarterly for some).
EC Sales List (ESL / Souhrnné hlášení) : Required for intra-EU B2B supplies of goods or services.
Intrastat Reporting: Required if annual trade with other EU countries exceeds thresholds.
VAT Deadlines
VAT returns are generally submitted monthly.
If a business’s annual turnover is below CZK 15 million, it may opt to file quarterly, unless it is:
A newly registered VAT payer
An unreliable VAT payer
Part of a VAT group
Returns must be filed within 25 days after the end of each tax period.
Nil returns (reporting no taxable activity) are required, except for non-established VAT payers, who are exempt from filing nil returns.
VAT payments must be made in CZK and received by the tax office within 25 days after the tax period ends.
Payments must be correctly identified using the taxpayer’s Czech VAT number (without the “CZ” prefix) as the variable symbol.
VAT Refund
Non-established businesses that are not VAT-registered in the Czech Republic can recover input VAT incurred in the country, provided they did not perform taxable supplies there during the refund period (except for reverse charge transactions or those reported via OSS).
For EU Businesses: Refunds are handled under EU Directive 2008/9/EC.
Non-EU Businesses: Refunds fall under the EU 13th Directive.
Czech Republic grants refunds only to countries with reciprocal arrangements (list published by Ministry of Finance).
Penalties for non-compliance
Late VAT Registration
If a taxable person fails to register on time, the tax office will register them retrospectively.
Penalties may be imposed for breach of non-monetary obligations.
Late Filing of VAT Returns
Penalty: 0.05% per day of VAT liability or overpayment, capped at 5% or CZK 300,000 per return.
Grace period: First 5 working days after the deadline are penalty-free.
Additional penalty of 20% of reassessed VAT if the tax authority increases VAT due or reduces VAT deductions.
Failure to file electronically: CZK 1,000 fine per return.
Late VAT Payment
Default interest applies starting from the 4th working day after due date.
Interest = CNB repo rate + 8 percentage points (since 2021).
Interest may be applied for up to 5 years.
Control Statement (VAT Ledger) Penalties
Penalties range from CZK 1,000 to CZK 500,000, applied automatically.
Waivers may apply under certain conditions.
Intrastat & EC Sales List Penalties
Intrastat: Up to CZK 1 million for late, missing, or incorrect declarations.
EC Sales List: CZK 1,000 for failure to file electronically.
Other Compliance Failures
Failure to update VAT registration details or keep VAT records: Fines up to CZK 500,000 (≈ EUR 20,500).
Errors and Fraud
No specific penalties for basic errors, but related violations may trigger penalties as outlined above.
For fraud, input tax deduction may be denied, or joint liability may apply if the taxpayer “knew or should have known” VAT would not be paid.
Personal Liability
Company directors may be held personally or criminally liable for intentional nonpayment or tax evasion.
Even preparation for VAT fraud is considered a criminal offense.
Common VAT Terms
- Value Added Tax – Daň z přidané hodnoty (DPH)
- VAT Payer – Plátce DPH
- Taxable Person – Osoba povinná k dani
- VAT Identification Number – Daňové identifikační číslo (DIČ)
- Input VAT – Vstupní DPH
- Output VAT – Výstupní DPH
- Taxable Supply – Zdanitelné plnění
- Exempt Supply – Osvobozené plnění
- Reverse Charge – Režim přenesení daňové povinnosti
- VAT Return – Přiznání k DPH
- Control Statement – Kontrolní hlášení
- Summary Report / EC Sales List – Souhrnné hlášení
- Intrastat Declaration – Hlášení Intrastatu
- Taxable Turnover – Obrat
- Tax Point / Time of Supply – Okamžik uskutečnění zdanitelného plnění
- VAT Ledger – Evidenční hlášení
