VAT Czech Republic
- Published: 30.11.2022
- Updated: 15.01.2023
Value-added tax (VAT) Czech Republic applies in four variants. In addition to the standard rate of 21%, there are two reduced rates, namely 15% and 10%, as well as a 0% rate for international passenger transport. In this article, we will describe the most important VAT issues in the Czech Republic, as well as the registration and settlement of VAT in this country.
The standard VAT rate in the Czech Republic
VAT was introduced in the Czech Republic in 1993, and since then its rate has changed several times and a number of additional tax rates have been added.
Apart from the 21% standard VAT rate, which applies to all goods and services, the Czech Republic has three reduced VAT rates for certain categories.
The reduced 15% VAT rate in the Czech Republic
The reduced 15% VAT rate applies, e.g. to:
- food ( with the exception of essential products for children and gluten-free products),
- dishes served at restaurants,
- non-alcoholic beverages,
- medical equipment for people with disabilities,
- sports-related services and tickets for sports events,
- culture-related services and tickets for cultural events,
- certain services, including e.g. medical, cleaning
The reduced 10% VAT rate in the Czech Republic
The reduced 10% VAT rate applies, e.g. to:
- Baby food and gluten-free products
- Newspapers, magazines and books (also in digital form)
- Selected pharmaceuticals
The reduced 0% VAT rate in the Czech Republic
Selected services related to international passenger transport are not subject to VAT in the Czech Republic.
When are you required to pay VAT in the Czech Republic?
Year by year, the Czech Republic is becoming an increasingly attractive market for e-commerce companies operating in Europe. This is confirmed by, among others, opening Amazon FBA fulfilment centres in the country, as well as the entry of the German marketplace, Kaufland.de, into the Czech market. However, entering this market is usually related with the need to settle VAT in the Czech Republic.
For foreign companies, selling their products in the Czech Republic, the obligation to settle VAT occurs in two situations.
Firstly, if you warehouse goods in the Czech Republic, you must settle VAT there. This applies whenever goods are stored by companies offering a fulfilment service or the Amazon FBA sales model with the Czech Republic warehousing option.
Secondly, you must also settle VAT in the Czech Republic, if your total sales to EU countries under the intra-Community distance sale of goods, exceed €10,000. EUR. This option, however, allows VAT to be settled with both the Czech Tax Office and using the VAT OSS procedure, which enables e-commerce companies to settle VAT within the EU in a simplified manner.
VAT return and payment deadlines in the Czech Republic
The VAT is due by the 25th of the month, following the accounting period.
Declarations and payments are submitted on a monthly basis, although companies that did not exceed CZK 10,000,000 in turnover in the previous year have the option to settle quarterly.
VAT registration process Czech Republic
If all documentation is complete and submitted in the correct way, VAT registration in the Czech Republic takes approximately one month, although in some cases the process can extend to two months.
VAT Czech Republic - potential penalties and interest
Inaccurate or incorrect reporting may result in a penalty of an additional 20% of tax liability.
If VAT is not paid on time, interest is charged at the Czech National Bank’s repurchase rate, plus 14%. Interest is charged for up to five years.
Tax office in the Czech Republic
The Tax Office address, relevant for foreign companies registering as VAT payers in the Czech Republic, is:
Finanční úřad Ostrava I Jurečkova 940/2, 700 39 Ostrava
Intrastat in the Czech Republic
Besides the obligation to register and settle VAT in the Czech Republic, some companies may also be required to report Intrastat. These reports contain information on the import and export of goods between EU countries and the movement of own goods between warehouses in different countries.
Such an obligation arises once the amount on export or import of goods exceeds CZK 12 million.