Czech RepublicManual

VAT in Czech Republic

VAT Deduction Limits in Czech Republic

Input VAT is generally deductible as long as the goods or services are used for business purposes.

However, certain expenses are subject to special rules:

  • Hotel accommodation: input VAT is generally deductible.
  • Business gifts of a cost higher CZK 500: input VAT is generally not deductible.
  • Business entertainment: input VAT is generally not deductible.
  • Passenger car purchase, hire and maintenance: input VAT is generally deductible.
  • Advertising: input VAT is generally deductible.
  • Mobile phones: input VAT is generally deductible.
  • Fuel for vehicles: input VAT is generally deductible.
  • Books: input VAT is generally deductible.

Particular VAT deduction rules apply to VAT refund claims of non-EU businesses. A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.

Statute of Limitations in Czech Republic

The statute of limitations is three years in Czech Republic, starting from the day of deadline to filing the correspondent tax return. However, this time period may be extended under specific circumstances, although there is a maximum of 10 years from the beginning of the limitation period.

The statute of limitations period determines the periods on which the tax authority can go back to review the information declared, and apply additional VAT assessments, penalties or interests.

The statute of limitations also determines the period a taxpayer can voluntarily correct any errors on past submissions, as well as deduct input VAT.

You can find an overview of the statute of limitations in Europe under the following link. Art. 73.1.3 Czech VAT Act includes the statute of limitations period for VAT deduction.

Tax point rules in Czech Republic

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

  • General rule: When the supply of goods or services takes place, or by the date of payment, whichever occurs earlier. Particular rules apply to specific supplies of goods or services.
  • When it comes to services, the taxable transaction is considered to be made when supplied, or the date of issue of the invoice, with the exception of an installment or payment schedule, on the day that occurs earlier.
  • Advanced payments: Tax point is considered to have occurred when the advanced payment is received.
  • Continuous supplies: In the case of services taxable in Czech Republic and supplied for more than 12 calendar months, the liability to account for VAT arises, at the latest, on the last day of each calendar year following the calendar year in which the provision of the service has started. This provision does not apply in case of advanced payments, or in the case of heat, cooling, electricity and gas.
  • Intra-Community acquisitions and supplies: Tax point occurs on the invoice date or the 15th day of the month following the month in which the invoice was issued, whichever occurs earlier.
  • Import: Tax point occurs when the goods are imported according to the relevant import documents.

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