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Czech Republic plans new reduced VAT rate

  • Apr 15, 2014 | Richard Asquith

Czech Republic plans new reduced VAT rate

The Czech Republic plans to introduce a second, reduced VAT rate of 10% on key products.  The current Czech VAT rate is 21%, and the only reduced VAT rate is 15%

Lower VAT on books and medicines

The coalition government has discussed many reforms of the Czech VAT rates, including a plan to merge the 21% and 15% rates at 17.5%.  However, it is clear there is limited room for manoeuvrings on the budget as the economy recovers slowly than hoped.  The government did hold out the hope of a 1% cut in the standard rate to 20% in 2016 following the Czech VAT rise to 21% in 2013.

As a compromise, the parties favour introducing  a new reduced rate of 10% on books and medicines.  The EU VAT Directive does permit two reduced rates, the lower of which must be 5% or above.  The probable implementation date will be 2015 subject to the country making progress towards the Euro currency 3% GDP deficit target.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.