VAT
Last reviewed 21 Aug 2023
Tax rates
Standard rate: 21 %
applicable also for the transfer of a building (except so-called welfare housing) if not VAT exempt
Reduced rate: 12 %
e.g. for food but excluded beverages other than tap water, milk and milk products, renovation and building work performed on finished residential buildings (apartment houses, family houses and apartments) or construction of apartments, family houses and apartment houses for welfare housing (if not VAT exempt), supply of welfare housing including land directly related to welfare housing, medical care, various medical devices, public land transport, accommodation services, catering services with exclusion of beverages other than tap water, milk and milk products, entry to various cultural/sport events, supply of heat, cold, tap water, newspapers and periodicals, etc.
Supply of goods
Supply of goods and withdrawal for private use (self-supply) are taxable. Supply of goods free of charge is also taxable, in case input VAT was previously deducted from such goods by the respective VAT payer. Harmonized rules for e-commerce and call-off stock arrangements.
Place of supply of goods
Principally the place where the item is located at the time disposal is transferred (static supply).
In case of dispatch/transportation by the supplier or purchaser: the place where dispatch/ transportation begins (moving supply).
In case of import: in that country, where the goods are cleared through customs (customs procedure)
Supply of goods on the board of a ship, airplane, railroad within the EU: the place of departure.
Special regulations apply for chain transactions, triangular transactions, distance sales and sales through a (facilitated) electronic platform.
Supply of services
Supply of services and private use / supply of services without consideration (self-supply) are taxable
Place of supply of services
Differentiation is made between services rendered
- to taxable persons (“Business to Business”, “B2B”) or
- to non-taxable persons (“Business to Customer”, “B2C”).
For purposes of determining the place of the supply of services,
- taxable persons with independent business activities and
- non-taxable legal entities with VAT registration number will be considered as “taxable persons”.
Basic rule
| B2B |
B2C |
| Place of recipient
(The place where the recipient of services has established his business) |
Place of supplier
(The place where the supplier of services has established his business) |
Special cases
|
B2B |
B2C |
| Supplies of services by intermediaries |
Place of recipient (Basic rule) |
Place of the underlying transaction |
| Property services |
Place of the property |
Place of the property |
| Cultural, artistic, scientific, educational, sports, entertainment or similar services, like services in connection with fairs and exhibitions or related other services which also include services of the respective organizers. These services do not include the right of entrance for these events. |
Place of recipient (basic rule) |
Where the services are physically carried out |
| Cultural, artistic, scientific, educational, sports, entertainment or similar services concerning the right of entrance for these events (e.g. tickets for these events) and related other services connected with this right of entrance. |
Where the services are physically carried out |
Where the services are physically carried out |
| Passenger transport |
Distances covered |
Distances covered |
| Transportation of goods (without intra-Community goods transportati |
Place of recipient (basic rule) |
Distances covered |
| Intra-community goods transportation |
Place of recipient (basic rule) |
Place of departure of the transport |
| Ancillary transport services |
Place of recipient (basic rule) |
Where the services are physically carried out |
| Appraisal and processing of movable tangible objects |
Place of recipient (basic rule) |
Where the services are physically carried out |
| Restaurant and catering services |
Where the services are physically carried out |
Where the services are physically carried out |
| Restaurant and catering services in connection with intra-community passenger transport |
Place of departure |
Place of departure |
| Renting of means of conveyance for up to 30 days |
Where the means of transport is actually put at the disposal of the customer. In case of third countries where the services are effectively used. |
Where the means of transport is actually put at the disposal of the customer. In case of third countries where the services are effectively used. |
| Renting of means of conveyance for over 30 days |
Place of recipient (basic rule) |
Place of recipient
Special regulations for renting pleasure boats
|
| “Listed services” to third country customers |
Generally place of recipient (basic rule) . However, in case the recipient is the CZ VAT payer and the service is consumed in CZ, place of the supply is in CZ (applicable for all the services with basic rule applicable). |
Place of recipient |
| “Listed services” to customers in the EU |
Place of recipient (basic rule) |
Place of supplier (basic rule)
|
| Electronically supplied services, such as telecom, radio and TV services 2) |
Place of recipient (basic rule) |
(i) Place of recipient (if the threshold EUR 10.000 is exceeded or the supplier voluntarily decides to do so)
(ii) Place of supplier (if the service is supplied by a supplier established only in one EU Member State and the threshold EUR 10.000 is not exceeded)
|
Mini-One-Stop-Shop (MOSS) / One-Stop-Shop (OSS)
Taxable person established in EU
They can register into OSS in their country of establishment and use this regime for declaration and payment of VAT for the following supplies within EU:
- B2C services (except for those with a place of supply in their home country);
- B2C supplies of goods above the threshold of EUR 10,000 (except for those with a place of supply in theie home country);
- Supplies by electronic platforms providers
Taxable persons established in EU can also use import OSS (IOSS) for the B2C supplies of goods under EUR 150.
Taxable persons NOT established in EU
If they supply services to non-taxable persons with a place of supply in the EU, they can register in the Czech Republic into OSS regime and declare all such supplies here (they can be registered in OSS only in one EU member state). OSS can be used also for B2C supplies of goods within EU (where the transport starts in the Czech Republic) effected by taxable persons not established in EU (although a different OSS registration is required).
Reverse charge (reversal of tax liability)
For all supplies of services and work supply.
Requirements
In order the reverse charge regime to be applicable to the supply with a place of supply in the Czech Republic, the following has to be fullfilled:
- The supplier of the service has no domicile, no habitual abode, and no fixed establishment involved in the transaction in the Czech Republic (not-established supplier) and the recipient of the services is VAT registered in the Czech Republic
- In case of supplies of goods with installation/assembly by a not-established supplier to person registered for CZ VAT the supplier is must not be registered as a Czech VAT payer.
the non-established supplier not registered as a CZ VAT payer supplies the goods locally within the Czech Republic to CZ VAT payer.
Consequences
Invoice without VAT, indication of the reverse charge, VAT registration numbers of the supplier and the recipient
The recipient is liable for the VAT.
Application also
The tax must be declared and paid by the recipient of the supply of services or supply of goods if the supply is carried out between two CZ VAT payers acting as such.
This applies only for:
- Supply of gold
- Supply or processing of waste
- Trade with emission certificates for global warming gases
- Provision of construction and installation work
- Supply of goods listed in Government regulation, e.g. metals, cereals and industrial crops, sugarcane, mobile telephones, integrated circuits, tablets and video game consoles (for supplies over CZK 100,000 (EUR 3,990))
- Transfer of immovable property in case the seller opts for taxation of the sale.
- Resale of gas, electricity and telecommunication services under specific conditions. Provision of construction workers by outplacement agency.
Tax reliefs
Exemption (Input VAT deductible even though no VAT chargeable on supply of goods and services)
- Intra-community supplies of goods (IC Sales of goods MUST be declared also in EC Sales List declaration in order to apply exemption from VAT)
- Exports of goods
- Supplying of services on movable assets to a third country (for a person without domicile in the Czech Republic, where the goods had been transperted for the purpose of such works to the Czech Republic and which leaved EU after the services)
- Transportation and services directly connected with import and export of goods
- International passenger transport
- Exempt import of goods (e.g. so called regime 42, where the goods are imported in one EU state and subsequently dispatched to another EU state)
- Special cases such as supplies for EU institutions or NATO)
- Supply of books (incl. audiobooks and e-books) and the lending of them by public libraries; only for books where advertising covers less than 50 % of the content
Zero rates (“non-genuine” tax exemption) (Input VAT is not deductible)
- Postal services
- Radio and TV service
- Financial services (exhaustive list)
- Services of insurance companies and pension funds
- Leasing of immovable properties that are neither accomodation services or used for residential purposes
- Transfer of land (except building lots) and buildings except of the first transfer of a building
- within 23 months after effectivness of an occupation permit or an occupation permit after significant reconstruction or
- within 23 months after the reconstruction becomes significat should the building be transfered before an occupation permit is issued.
Where the building or a reconsutruction is not subject to issuance of occupation permit, the time test is calculated from the fulfillment of conditions for ocupancy. (the supplier is entitled to opt for taxation of the transfer of real property)
- Healthcare services and related goods
- Educational services
- Social services
- Supplies within a special scheme for SMEs
General
Input VAT (VAT and import VAT invoiced to the business for the supply of goods and services) deduction is possible if a VAT payer uses such supplies within his economic activities for the purspose of his taxable supplies or supplies exempted with the right for VAT deduction.
Generally no deduction of input VAT when inputs are used for (non-economic activity or representation) or to economic activity without VAT deduction.
Restriction on input VAT deduction related to passenger cars
When purchasing a passenger car (category M1) that will be considered a fixed asset for accounting and tax purposes, the VAT payer can claim the VAT deduction of maximum CZK 420,000 (EUR 16,760). The maximum limit of the VAT deduction is set together for purchase and any further refurbishment or technical improvement of the car. This maximum limit for VAT deduction is also set for acquiring of a passenger car by means of financial lease.
Fixed assets
For real estate property the period for input VAT corrections is extended to 10 years (including structural improvement). For other long-term assets the period for input VAT corrections is 5 years. The correction of input VAT deduction has to be considered if a change in use of the asset from the VAT point of view occurs within the mentioned period or they were stolen or damaged within this period and this fact cannot be properly documented by the VAT payer .
Correction of input VAT may be applicable also for significant repairs (value above CZK 200,000 / approx. EUR 7,981) carried out on to the sold immovable property within 10 years before the sale.
Input VAT dedution shall be corrected also in cases of other than long-term assets (such as stocks) provided they are used for different VAT purposes within 3 years since the VAT deduction was claimed or they were stolen or damaged within this period and this fact cannot be properly documented by the VAT payer.
If a passenger car (category M1) originally acquired as a stock is transferred to fixed assets of a VAT payer, the VAT payer has to correct the VAT deduction claimed by purchasing the passenger car to the amount of VAT deduction for which he would be entitled if the passenger car was acquired directly to the fixed assets (maximum limit of CZK 420,000 (EUR 16,760)).
Unpaid liabilities
The VAT payer is obliged to return the claimed VAT deduction if he had not paid such supply to his vedner withinh 6 months from the due date. Once the supply is paid, the deduction can be claimed back.
Real estate
Rentals
Renting of immovable property (land and buildings) is VAT exempt without right for VAT deduction; the lessor can opt for application of VAT if both of the following conditions are met:
- if the lessee is Czech VAT payer
- if the lessee uses premises for business purposes.
VAT payer cannot opt for taxation in case of lease of premises used for housing purposes (such as lease of house, apartment, land connected to house, etc.).
Short-term lease (under 48 hours continuously) of immovable property, lease of parking space and safety boxes (if forming an independent supply) is considered a taxable supply.
Sales
The sale of land which is neither considered as a building land nor built-on are VAT exempt without right for VAT deduction; otherwise VAT regime of building is taken over. Sale of buildings is VAT exempt without right for VAT deduction except of the first transfer of the building
a) within 23 months after effectivness of an occupation permit or an occupation permit after significant reconstruction or
b) within 23 months after the reconstruction becomes significat should the building be transfered before an occupation permit is issued.
Where the building or a reconstruction is not subject to issuance of occupation permit, the time test is calculated from the fulfillment of conditions for ocupancy. If not VAT exempt, VAT of 21 % for residential buildings (except so-called welfare housing where the VAT of 12 % is applied) and 21% for other buildings is applied. The supplier is entitled to opt for taxation of the transfer of property exempt from VAT (customer who is a Czech VAT payer or a person registered for VAT in other EU Member State has to provide its agreement with the taxation in advance). In case the opt for taxation has been applied and the recipient is CZ VAT payer, reverse-charge is applicable.
Welfare housing
A reduced VAT rate is applied on construction and supplies of welfare housing (if not VAT exempt). The welfare housing is represented by e.g. apartment smaller than 120 squ.m., family house smaller than 350 squ.m., apartment houses where more than 50 % of area of the building form apartments up to 120 squ.m, specified buildings (used for provision of social services etc.)
Application for refund is no longer required to be made at the foreign tax authorities, instead:
Electronic application (via the internet portal of the Finance ministry) to be made by the Czech taxable person at its competent Czech tax office by 30 September of the following year at the latest.
Foreign taxable persons
Taxable persons without domicile or fixed establishment in the Czech Republic.
Registration
Registration required for foreign persons not registered in special scheme for SMEs in the Czech Republic if supplies are effected in the Czech Republic for customer not registered for VAT in the Czech Republic.
Foreign persons registered in special regime for SMEs are oblidged to register for VAT if their turnover in the Czech Republic exceed CZK 2,000,000 (approx. EUR 79,808).
Refund of input VAT for taxable persons domiciled in the EU
If no sales (with some exceptions) are effected in the Czech Republic, a taxable person registered in another member state can apply for input VAT refund concerning goods and services purchased in the Czech Republic.
The application must be filed electronically at the competent tax office in the member state of the establishment of the taxable person by 30 September of the following year at the latest.
The application must be in the Czech language and must be accompanied by the electronic copy of the tax document if the tax base exceeds the equivalent of EUR 1,000 (EUR 250 for fuel costs).
The period for which an input VAT refund can be applied is a maximum of 1 year and a minimum of 3 months (shorter period possible, if it relates to the rest of the calendar year).
The minimum input VAT refund is EUR 400 if the refund period is less than a calendar year but more than 3 months, and EUR 50 if the refund period is the calendar year or period less than 3 months at the end of the year.
Refund of input VAT for taxable persons not domiciled in the EU
If no sales are made in the Czech Republic, a taxable person registered in a third country can apply for input VAT refund concerning goods and services purchased in the Czech Republic.
Input VAT is refunded based on a principle of reciprocity.
Refund must be applied by 30 June of the following year.
The period for which an input VAT refund can be applied is a maximum of 1 year and a minimum of 3 consecutive months (shorter period possible, if it relates to the rest of the calendar year).
The minimum input VAT refund is CZK 7,000 (EUR 287) if the refund period is less than a calendar year but more than 3 months, and CZK 1,000 (EUR 41) if the refund period is the calendar year or period less than 3 months at the end of the year.
Special Scheme for SMEs
A taxable person established in other EU country can voluntarily register in the special scheme for SMEs in the Czech Republic provided his/her EU turnover has not exceeded (in a current and previous calendar year) EUR 100,000 and a Czech turnover has not exceeded CZK 2,000,000 (approx. EUR 79,808). The registration to this regime is done via a tax authority in the EU country of the establishment of the taxable person. If registered to this special regime in the Czech Republic, the transaction carried out in the Czech Republic are VAT exempt.
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