Czech Republic to Consolidate Reduced VAT Rates to 12% in 2024

Czech Republic plans to Consolidate Reduced VAT Rates to 12% in 2024.

The Czech Republic is set to make significant changes to its Value Added Tax (VAT) system, aiming to simplify and streamline its tax structure. The Parliament's Lower Chamber has approved a draft bill that will convert multiple reduced VAT rates into a single 12% rate, as well as a new zero VAT rate for books, effective from 1 January 2024. Additionally, certain supplies will increase the VAT rate and will be now taxed at the standard VAT rate.

In consequence, under the proposed legislation, several items will see changes in their VAT rates:

  • Supplies rising to 21% standard rate: these include alcohol, draught beer, and services like hairdressing.
  • Supplies moving to the new 12% VAT rate: Supplies subject to 10% and 15% reduced rates will be now subject to a single 12% rate. This includes basic foodstuffs, printed magazines, newspapers, certain medicines, entrance fees to sports and cultural events, and housing.
  • Books Exempt from VAT: Finally, books will be exempt from VAT, a significant change from the current 10% rate.

The draft bill now requires approval by the upper house of Parliament, the Senate House.

According to the official proposal, the measure will lead to greater efficiency and transparency of the VAT system, reduce opportunities for tax optimization, and, last but not least, eliminate absurdities such as the application of three different VAT rates on draught beer.

The planned implementation date for these VAT rate changes is 1 January 2024. However, it's worth noting that an economic evaluation is currently underway.

Have a look at our overview of VAT rates in the EU and the Czech Republic.

It is important to mention that these changes align with EU regulations on reduced VAT rates. In April 2022, the EU agreed to give member states more flexibility in setting reduced VAT rates. 

The Czech Republic's move towards VAT rate consolidation reflects its commitment to fiscal stability and aligns with broader EU initiatives to provide member states with greater flexibility in tax policies. You can find the official announcement here.

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