Czech Republic VAT Rates and Requirements

Value Added Tax, or VAT, is a consumption tax applied to goods and services sold within the Czech Republic. Known locally as Daň z přidané hodnoty (DPH), it is collected by businesses on behalf of the government. The final consumer ultimately bears the cost of the tax, which is integrated into the price of most products and services.

Czech VAT Rates and Applications

The Czech Republic’s VAT system has a standard rate and a reduced rate. The standard VAT rate is 21% and applies to goods and services not qualifying for a reduction or exemption. This rate covers a wide array of products, including electronics, clothing, alcohol, and various professional services.

Effective January 1, 2024, previous reduced rates were consolidated into a single 12% rate. The 12% rate applies to a specific list of goods and services, including most foodstuffs, with the exception of many beverages other than tap water and selected milk-based drinks. The reduced rate also applies to pharmaceutical products, medical devices, public transportation, and construction for social housing. It covers accommodation services, admission to cultural events, catering, water treatment, and some agricultural supplies. In 2024, items like draught beer, hairdressing, and bicycle repairs were moved to the standard 21% rate.

The Czech VAT system also includes zero-rated and exempt supplies. Zero-rated supplies are taxable at 0%, such as the intra-community supply of goods to a VAT-registered business in another EU country. Businesses making zero-rated supplies can still deduct the input VAT paid on related purchases.

In contrast, VAT-exempt supplies are not subject to VAT, and businesses cannot deduct input VAT on related costs. This category includes financial, insurance, and certain educational or health services. The supply of books, whether in printed or electronic form, is now zero-rated.

VAT Registration Obligations

A resident business must register for VAT if its turnover exceeds CZK 2,000,000 in a calendar year. Non-resident businesses making supplies within the Czech Republic have no registration threshold and must register immediately. This applies if they make a supply subject to Czech VAT where tax is not shifted to the customer, such as when a foreign company sells stock held locally to Czech customers.

For businesses in other EU countries selling to non-VAT registered customers in the Czech Republic, registration is required once the total value of these sales across the EU exceeds EUR 10,000 in a calendar year.

Businesses that do not meet the mandatory threshold can register voluntarily. This is advantageous for companies selling to other VAT-registered businesses, as it allows them to reclaim input VAT paid on expenses like raw materials or office equipment.

Invoicing and Compliance

A registered business must issue VAT invoices containing specific details. Invoices must be issued within 15 days of the taxable event and include:

• Date of issue and a unique sequential invoice number
• Full name, address, and VAT ID number for both the supplier and the customer
• Description and quantity of goods or services supplied
• Date of supply if different from the invoice date
• Net value of the supply
• Applicable VAT rate and the final VAT amount in Czech Koruna (CZK)

The standard reporting period is monthly. The deadline for submitting the VAT return and paying the tax is the 25th day of the month following the end of the reporting period.

Filings must be completed electronically via the Czech Financial Administration’s portal. Along with the VAT return, businesses are required to submit a “Control Statement,” a detailed report of all individual domestic transactions. This statement, which shares the same filing deadline, allows tax authorities to cross-check invoices to combat fraud.