Tuesday, 23 August 2022 09:55

VAT in the Czech Republic - key information

VAT in the Czech Republic VAT in the Czech Republic pixabay

Business expansion into foreign markets should be preceded by detailed research and professional advice in the field of tax law, especially VAT, which is a quite complex matter.

The issue of VAT in the European Union

Due to Directive 2006/112 / EC of the European Council, the minimum standard VAT rate that may be applied by the Member States of the European Union is 15%. In addition to the basic rate, reduced and special rates are applied, or some goods are not subject to VAT. In each of the EU countries, this issue is different, so also in VAT in the Czech Republic.

VAT in the Czech Republic — key historical facts

The VAT tax was implemented in this country in 1994 and was regulated by domestic regulations. However, when the Czech Republic joined the European Union, which took place on May 1, 2004, the government was obliged to use EU directives in the field of VAT. The institution that supervises the VAT area is the Czech Ministry and the Finance Tax Authorities.

Who is subject to VAT?

Companies distributing goods and providing services in the Czech Republic must have a Czech VAT number. This applies, for example, to intra-Community sales, trade in the Czech Republic, the import of goods and services into the Czech Republic, trade based on warehouse agreements, or the organisation of events.

Standard tax rate in Czech Republic comparing to EU countries

The standard VAT rate is 21%. The same rates are in Spain, the Netherlands, Lithuania and Latvia. Lower, in Luxembourg - 17%, Malta - 18%, Germany and Cyprus - 19%. Higher ones, for example, in Poland - 23%, in Greece and Finland - 24%, and in Hungary - 27%.

What is the issue of reduced VAT in Czech Republic?

These rates are 15% or 10%. Regarding to the the first rate, it applies to such products as, for example, certain categories of food, including agricultural products, non-alcoholic beverages, selected types of medical equipment or child car seats. Some services related to public transport, sports, cultural and artistic events, gastronomy or tourism.

The reduced 10% VAT applies to certain medicines, baby food as well as newspapers and books.

And how about 0% VAT?

As in all EU countries, this tax solution is applied to areas such as e. g. international transport and intra community supplies,

Next tax exemptions

There is also a fairly wide catalog of business areas that are VAT exempt in the Czech Republic, without the possibility of deducting the input. These include, for example, financial activities, insurance, radio and television broadcasting or the sale of land.

Professional support in the field of VAT settlement in the Czech Republic?

To be effective in Czech Republic market, it is worth establishing a long term cooperation with a tax company that provides wide scope of business tax compliance and accounting services. It is worth getting support from a company that has been on the market for a long time. Intertax is such a company, and you can learn more about VAT in the Czech Republic on the website of this advisor at https://polishtax.com/vat-in-the-czech-republic/


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