Czech Republic considers new reduced VAT rate

The Czech coalition government is considering introducing a new, reduced VAT rate for medicines.

The EU VAT Directive permits two reduced VAT rates below any member state’s standard VAT rate.  These rates may not go below 5%.  Currently, the Czech Republic only has a single reduced VAT rate of 15% - the standard Czech VAT rate is 21%.

The proposed new reduced VAT rate would help offset the planned withdrawal of the patients’ health regulatory fees.  This would hit insurers.