Czech Republic

The Czech Republic introduced Value Added Tax regime in 1993, in preparation for its accession into the European Union in 1994.  It is known as Dan z pridane hodnoty locally.

The Czech VAT rules are contained within the 1994 VAT Act.  The incorporates the main requirements of the EU VAT Directives, which the Czech Republic is obliged to follow as a member of the EU.  This includes the rules for Czech VAT registration, returns and compliance.

The Ministry of Finance oversees the consumption tax regime, and issues regular guidance briefings and instructions in support of the VAT Act.

Should you register for Czech VAT?

Foreign companies offering local goods or services may be required to register for Czech VAT.  As with the rest of the EU, the common situations triggering a registration include:

  • Importing goods into the Czech Republic
  • Intracommunity sales (dispatches) or purchases (acquisitions) of goods from other EU member states
  • Trading, buying and selling goods in Czech Republic
  • Holding goods under consignment stock arrangements in the Czech Republic for sales to local customers
  • Internet retailing goods to Czech consumers, subject to a local distance selling threshold
  • Running live events, exhibitions or conferences with paid admission on the door
  • If a company is otherwise a non-VAT trader, but is receiving services in Czech Republic under the reverse charge rule.
  • The self supply of goods.

Following the implementation of the 2010 EU VAT Package, there are very few situations which require foreign companies providing supplies of services in the Czech Republic to register for VAT.

Note that providers of electronic, broadcast or telecoms services to consumers in the Czech Republic only have to VAT register in one EU country under the MOSS scheme to file a single return covering all 27 member states.

If you do need to VAT register, read our Czech VAT registration briefing to understand the requirements, including any VAT registration thresholds that may apply.

There may be further exemptions from the requirement to VAT register in Czech Republic that you should consider.  Please read our Czech VAT Reverse Charge briefing.

Need help with your Czech VAT compliance?

Researching Czech VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.