The Czech VAT law is in accordance with principles of the common European system of VAT. VAT is generally due on a supply of goods or services with the place of supply in the Czech Republic carried on by a taxable person in the course of economic activities.
Which TAX rates are in the Czech republic?
VAT in the Czech Republic is charged at three rates:
- The standard rate of 21 % on the sale of goods and services
- The reduced rate of 15 % on the sale of certain goods such as food, non-alcoholic beverages, water and sewage, heat, urban transport, magazines and newspapers, accommodation services, tickets for cultural events and, in principle, housing construction works.
- The second reduced rate of 10 % on the sale of drugs, radiopharmaceuticals, vaccines, diagnostic reagents for use in patients, hormonal contraceptives for health services, prevention of diseases and treatment for human medical purposes. The second reduced rate also includs a veterinary medicines.
Who is obliged to be registered for VAT in Czech Republic?
- Entities that have seat, place of business, or fixed establishment in the Czech Republic once they make a taxable supply in the Czech Republic on which they have to account for VAT
- Entities with turnover that exceeds CZK 1 million in twelve consecutive calendar months. Even if the threshold is not exceeded, Czech entities can choose a voluntary registration.
The process of registration for Czech VAT:
The voluntery process of Czech VAT registration usually takes some weeks depending of the documentation provided to the tax office where is necessary to specify the reasons for registration. If the Tax authorities accept the application for VAT registration, the entities have to submit VAT return and VAT control statement every month. The tax is always due payable by the 25th day after the end of the taxation period.
The entities that make a taxable supply in the Czech Republic, there is no VAT registration threshold, and these entities must submit an application for registration as a VAT payer within 15 days after they made the taxable supply – they become a VAT payer in the Czech Republic automatically – even without VAT registration.
A person who has a registered seat, place of business, or establishment in the Czech Republic is obliged to register for VAT if its turnover exceeds CZK 1 million in 12 consecutive calendar months.
Even if the threshold is not exceeded, Czech and foreign entities can choose voluntary VAT registration in the Czech Republic.