1. VAT in Europe
3. VAT in Czech Republic
5. VAT registrations and simplifications in Czech Republic

VAT registrations and simplifications in Czech Republic

When do I need a Czech VAT number?

Generally, a foreign business must register for VAT (Value Added Tax or Dan z pridane hodnoty (DPH) in the local language) in Czech Republic as soon as a taxable supply is made. The following are the usual examples of taxable transactions:

• Domestic supply of goods not reverse charged: A supply of goods located in the Czech Republic where reverse charge does not apply requires a VAT registration of the supplier.
• Supply of services not reverse charged: Foreign non-established businesses supplying services on which Czech VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
• Imports of goods in Czech Republic: when a non-established trader imports goods under his or her own name, a VAT registration may be required in Czech Republic.
• Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
• Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
• Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT. 
• Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

Non-established companies must submit apply for VAT registration before performing any of the above taxable transactions. There is no turnover threshold applicable to non-established companies.

Czech established companies can benefit from a VAT registration exemption threshold of CZK 2,000,000. This threshold increased by January 2023 and, as a result, a number of Czech businesses were allowed to request the cancellation of their VAT registration.

In case you performed taxable transaction in past periods, you can request a backdated VAT registration. You will need to regularize past reporting periods as from the registration date and explain in detail the activity performed and the reason for backdating it.

Find here the information available about VAT registrations in Czech Republic, as well as here and here information about VAT registration of non-established businesses.

Also, learn here more information about the registration threshold for established entities.

VAT registration pack in Czech Republic

When you have the Data Box activated, the registration pack in Czech Republic is submitted online.

You must prepare and submit the registration form electronically. The supporting documents and translations to Czech language must be uploaded as attachments to the registration form completed.

Normally, the registration pack of a non-established company contains the following supporting documents:

• Excerpt from Trade Register – issued in country of establishment, and simple translation to Czech language (sworn translation may be required in case of third countries).
• VAT certificate in the country of establishment and simple translation to Czech language (sworn translation may be required in case of third countries).
• PoA appointing the tax agent, including the Data Box number.
• Bank certificate of the company’s bank account in country of establishment, and simple translation to Czech language.
• Cover letter including the information with the exact VAT registration dates in other EU countries and corresponding VAT numbers.

Additionally, the following information is required in order to complete the registration form:

• The date since the company has become a liable taxpayer if applicable (registration date).
• The turnover for the 12 preceding consecutive calendar months prior to the application if applicable.
• Indicate the EORI number, if it is different from the tax identification number (or the tax identification number has not yet been assigned).
• Finally, you should consider that the field tax identification number should be included as follows: CZ999999999, we should also tick the taxpayer and that the company has no registered office or establishment in the Czech Republic.

Important! In the case of voluntary VAT registration (ie, you have not selected a backdated registration), the effective registration date is that of the day after the delivery of the registration decision.

 You can file a VAT registration application here.

VAT number format in Czech Republic

• Country code: CZ
• Structure: CZ # # # # # # # # # #
• If you are registered for VAT in Czech Republic, the VAT number is formed using the country code CZ and 8 digits.
• In the case of an individual taxpayer, the tax identification number consists generally of the prefix “CZ” and 10 digits which form its identification number.

You can verify here Czech VAT numbers, and find here more information about the format. Also, check here the methods available to verify intra-Community VAT numbers from other Member States.

Fiscal representative requirements in Czech Republic

Some countries require all non-EU companies to appoint a fiscal representative when registering for VAT. However, this requirement does not apply in Czech Republic.

VAT groups in Czech Republic

VAT grouping is possible in Czech Republic for businesses established in the country. Group members must be closely bound by either financial or organizational links, so they may form a VAT group and be treated as a single taxable person for VAT purposes.

Concerning the VAT group conditions, financial links exist when the same person or business directly or indirectly holds at least 40% of the capital or voting rights. Organizational links exist when the management of the controlled entities is dependent of the controlling entity.

In addition, the following VAT grouping rules apply in Czech Republic:

• Only taxable persons having their seat, place of business or business establishment for VAT purposes can be part of a VAT group.
• VAT grouping is optional in Czech Republic and, once is formed, the group members are treated as a single taxable person. Application must be submitted before 31 October, so the grouping takes effect as from 1 January of the following year.
• Intra-group transactions are disregarded for VAT purposes.
• Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
• One of the members of the group is established as the group representative. This member becomes responsible for dealing with all VAT requirements for the whole group: including the submission of VAT returns and making VAT payments

 Find here Art. 5a as well as Art. 95a of the CZ VAT Law regulating VAT groups. Also, find here general notices concerning VAT groups in Czech Republic.

Consignment and Call-off stock in Czech Republic

The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. Czech Republic has introduced the consignment stock simplification.

Also, check here internal country reference

Czech Republic Bad Debt Relief

Bad debt refers to an unpaid invoice for which the Supplier has paid the VAT to the tax administration: this is, an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer. This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries allow to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.

Bad debt relief refers to the possibility of recovering the VAT from that invoice. Czech Republic allows for bad debt relief under specific conditions:

• Insolvency: the customer was VAT registered at the time of the supply and became insolvent.
• Supplies deemed to be definitely unpaid: i) the supplier actioned a recovery proceeding for more than 2 years, or ii) the debtor ceased activity without a legal successor, or the successor is not covering the debt.

Bad debt relief is done by adjusting the output VAT paid in the periodic VAT return and Control Statement or Ledgers return.

Find here the official information about bad debt relief in Czech Republic, as well as the official guidance available to download. Arts. 46 and 71a Czech VAT Act regulate bad debt relief in Czech Republic. Also, the Control Statement guidelines provide further guidance on how to report this adjustment.

Czech Import Deferral and Postponed VAT Accounting

Czech Republic has introduced a postponed import VAT accounting mechanism where import VAT can be reported as input and output VAT (reverse charged) in the VAT return instead of being paid to the authorities upon importation. Postponed import VAT accounting applies automatically if conditions are met, basically, that the importer is VAT registered in the country. Taxpayers do not need to file a separate application.

If the importer is not VAT registered in Czech Republic in the moment of the importation, or violates the customs rules, import VAT is due.

Import VAT deferral, meaning delaying the payment of VAT for a given period, is also applicable in Czech Republic. VAT deferment accounts allow importers to pay import VAT and customs duties periodically, for a time period agreed with the relevant customs office.

Find here more information about the limited scenarios where import VAT is paid at Customs. Also, Section 23.1.b) to d) Czech VAT Act.

Czech Customs and VAT warehouses

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive.

Find here official EU guidelines on Customs’ special regimes.

Special VAT Schemes in Czech Republic

Businesses may benefit from the following special VAT regimes:

• Small businesses VAT registration exemption: this available only for established companies that do not exceed the CZK 2 million turnover of taxable supplies.
• Travel agents
• Margin scheme
• Investment gold.