VAT in the Czech Republic

The Czech Republic is a member of the European Union (EU) and draws up its tax rules according to the laws or directives issued from Brussels by the EU. The current VAT directive applies to all 27 member states of the European Union, and it governs the rules on VAT compliance, and in some part, covers the setting of VAT rates.

As an EU member state, the Czech Republic is obliged to implement the VAT directives, which provides guidance on VAT. Where there is a conflict, the European Union’s directive takes precedence. The Czech Republic is not a member of the Eurozone and uses its own currency, the Czech Koruna (CZK).  In the Czech Republic VAT is known as:  Daň z přidané hodnoty, or DPH.

VAT registration in the Czech Republic

Both EU and non-EU businesses may trade in the Czech Republic without establishing a local presence. This is known as non-resident VAT trading. There is no VAT threshold in the Czech Republic for the registration of non-resident traders, but you will need one to record transactions and your Czech customers will want proof that you have obtained one.

There are strict rules on the situations where VAT registration is permitted. Common scenarios that require Czech VAT registration include:

• Importing goods into the Czech Republic;
• Organising live events, conferences, etc. in the Czech Republic;
• Holding goods in a warehouse in the Czech Republic as stock for resale;
• Buying goods within the Czech Republic that are subsequently re-sold in-country;
• Selling goods from the Czech Republic to other EU member states;
• Distance-selling to private individuals in the Czech Republic, e.g. internet retailing or trading through an e-commerce platform.

Registering for VAT in the Czech Republic generally takes around a month once all documentation has been submitted to the tax authority, but this varies from seller to seller and will depend on the specifics of an individual company.

VAT compliance in the Czech Republic

There are detailed rules controlling the recording and processing of Czech transactions for VAT purposes. This includes guidelines on:

• Czech invoice requirements;
• When to issue a Czech tax invoice;
• Foreign currency reporting;
• Credit notes and corrections;
• Correcting entries from prior returns;
• Which accounting records must be maintained.

VAT rates in the Czech Republic