Privire generală Republica Cehă TVA

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The Czech Republic implemented its Value Added Tax (VAT) system in 1993, partially in anticipation of its entry into the European Union (EU) in 1994. Locally it is known as ‘Dan z pridane hodnoty’.

The Czech VAT rules are enclosed within the 1994 VAT Act. This integrates the main requirements of the EU VAT Directives, which the Czech Republic is obliged to follow as a member of the EU. This includes the rules for Czech VAT registration, returns and compliance.

The Czech Republic Ministry of Finance supervises the consumption tax regime, and issues regular guidance briefings and instructions in support of the VAT Act.

The Czech Republic VAT Law

The laws establishing the VAT are national laws, therefore, all business entities conducting business in the Czech Republic have to comply with the Czech VAT Act and EU Council Directive 2006/112 on the common system of value added tax.

Czech Republic VAT Registration

With the implementation of the European Single Market initiative in the 1990’s, it became possible to buy and sell goods without a local company – known as non-resident (no permanent establishment) VAT trading. There is no VAT threshold in the Czech Republic for the registration of non-resident traders that are VAT/GST/Tax registered in their home state, but you will require one to record transactions and your Czech customers will want proof that you have obtained one.

For EU VAT registered companies selling goods over the intranet to consumers in the Czech Republic, the VAT Registration Threshold (distance selling) CZK 1.140.000* per annum.

Czech Republic sets a number of situations where foreign companies should register for VAT. It follows many other of its fellow EU Member States. There are of course strict rules on the situations where a registration is permitted. Common scenarios which require a Czech Republic VAT registration include:

  • Importing goods into Czech Republic from outside the EU – please note there are a number of situations (e.g. onward supply) where the requirements are simplified,
  • Intra-community sales (dispatches) or purchases (acquisitions) of goods from other EU Member States,
  • goods provided to individuals via the internet, which are subject to a VAT registration threshold,
  • holding goods in warehouses as consignment stock for clients,
  • operating live events and/or shows with paid-for admission on the door,
  • a company that is a non-trader, but is receiving services in Czech Republic under the ‘reverse charge’ rule,
  • the self-supply of goods.

After the change to the place of supply VAT rules in the EU (2010 VAT Package), there are very dew situations where a foreign company must register for VAT if it is providing ONLY services.

Please note that providers of electronic, broadcast or telecoms services to customers in Czech Republic only have to VAT register in the one EU country under the MOSS scheme to file a single return covering all 28* Member States.

What information is required to get a Czech VAT number and registration?

The Czech tax office will require the applicable forms to be completed, and submitted with the following documentation:

  • If appropriate, a VAT certificate to prove the business is registered for VAT elsewhere in the EU,
  • A licence to execute economic activities,
  • An excerpt from the company’s national trade register.

All copies of documents MUST be translated into Czech by a certified translator.

Once the registration has been granted, which usually will take approximately 30 days, a unique Czech VAT number will be allocated to the company. All EU Member States have fixed format for their VAT numbers, in the Czech Republic the prefix is CZ followed by 8, 9 or 10 digits. For example – CZ 12345678, CZ 123456789 or CZ 1234567890.

Once the business has its VAT number, it is free to begin trading, and charging Czech VAT. But it must comply with the Czech Republic VAT compliance rules, and file regular returns (see ‘Czech Republic VAT Returns’ below).

Where are Czech VAT registrations submitted?

To register for Czech VAT an online application (in Czech) must be filed and a signed ‘hard copy’ of the validation of the electronic application should be delivered to:

Financni urad pro hlavni mesto Prahu
Stepanska 619/28
111 21 PRAHA 1
The Czech Republic

Czech Republic VAT Fiscal Representation

EU entrepreneurs or businesses are not required to appoint a full VAT fiscal representative for the Czech tax authorities. Entrepreneurs or businesses without any headquarter or fixed place of business within the territory of the EU, are obliged to register for VAT purposes in the Czech Republic and to appoint a fiscal representative.

The selection of a fiscal representative follows through the conclusion of a written agreement with an entitled business entity.

The fiscal representative is by law liable for tax liabilities of the foreign entity which they represent. They are also required to take specific actions on behalf of the entity and to fulfil its tax responsibilities.

Due to high requirements towards the fiscal representatives and considerable risks that lie with them, the opportunities in the Czech Republic are very limited.

EU Companies

Up to 2003 all companies trading across EU borders were obligated to appoint a local Fiscal Representative in each country where they were providing a taxable supply. This condition was simplified by EU VAT Directive 2006/65/EC, which required EU Member States to in its place allow companies to directly register with the appropriate tax authorities.

To this day, there still remain barriers to direct VAT Registration in several countries. These can range from tax offices being unwilling to provide simple clarifications of their compliance requirements and reporting procedures in anything but the local language, e.g. France and Spain; through to still requiring the formal appointment of a local tax agent, e.g. Poland and Bulgaria.

Additionally, if the EU company is importing goods in a number of EU countries, there are cash-flow friendly schemes that include the appointment of a Fiscal Representative.

Non-EU Companies

Approximately more than half of the 28 EU Member States require non-EU businesses to appoint a Fiscal Representative, if they are providing taxable services within their state borders. There are countries such as the UK, Germany and the Czech Republic have now withdrawn the requirement.

Since the responsibility to appoint a Fiscal Representative and possibly provide bank guarantees, can be extremely arduous, many non-EU companies chose to form a company in one EU country, which can then be used as a platform to obtain simplified direct registrations in the rest of the European trade block.

EU Importing

When goods are brought into the EU for the first time, a VAT number will require to be created to clear the goods through customs. Usually, this was done by the final customer. Progressively more, however, the sellers are looking to do this, so that they can keep confidential the cost valuation of the costs, as well as offer a door-to-door service for their customers.

This means that non-resident businesses are more than ever looking to obtain VAT numbers for importation purposes. For non-EU companies, this still requires a Fiscal Representative in most countries.

Whereas EU companies do not usually require a Fiscal Representative, there are a number of beneficial VAT deferral schemes which can save the importer significantly on cash flows. These often require the appointment of a local Fiscal Representative.

The role and liability of the Fiscal Representative

A Fiscal Representative is regarded by the tax authorities as the local agent of the foreign trader. In many cases, the Fiscal Representative is still held jointly and severally accountable for the taxes of the trader. As a result, it is consequently industry practice to require a full bank guarantee in favour of the Fiscal Representative to protect it from losses.

In most countries, the Fiscal Representative is obligated by the local tax code to make certain that:

  • The foreign trader is appropriately registered with the local tax office,
  • That the trader is fully compliant with rules on invoicing, VAT treatment, exchange rates etc.,
  • Accounting records should be maintained to exacting local standards, and that they are readily obtainable for examination by the tax authorities,
  • All VAT and associated filings are suitably prepared and submitted,
  • All enquiries and tax inspections from the VAT office are professionally handled.

Czech VAT Returns

Any company registered with the Czech tax authorities, as a non-resident VAT trader MUST report taxable transactions through periodic filings, known as ‘returns’.

How often are Czech VAT Returns necessary?

The standard VAT reporting period in the Czech Republic is one month. A business with a turnover of less than CZK 10.000.000* in the preceding year may opt to file quarterly returns, after it has been registered for three years. There is not a requirement for an annual return.

What Czech VAT can be deducted?

Additionally, when declaring sales or output VAT in the Czech Return, companies can offset this by the corresponding input or purchase VAT. There are some exceptions, which include:

  • Entertainment,
  • Taxi expenses,
  • Telephone charges,
  • Fuel for transportation,
  • Restaurant and catering expenses,
  • Accommodation costs,
  • Travel expenses.

The deadlines for filing Czech VAT Returns?

Czech monthly or quarterly VAT Returns are due on the 25th of the month following the tax return period. Any Czech VAT due must reach the Czech tax authorities’ bank account by the aforementioned deadline.

Where are Czech VAT Returns filed?

Czech VAT Returns must be submitted electronically. There is one exception, which is for individuals (sole proprietors) whose turnover in the previous calendar year was less than CZK 6.000.000*. The form should be submitted via the website of the Financial Administration of the Czech Republic at https://adisepo.mfcr.cz.

Czech VAT penalties

If there are mis-declarations or late fillings of Czech VAT Returns, foreign companies might be subject to penalties. Late filings or failure to register for VAT will result in penalties calculated according to potential lost revenue with a maximum penalty of CZK 300.000*. Inaccurate or incorrect filings will trigger penalties of 20%* of the further tax liability. In addition, interest is charged on late payment of VAT at the re-purchase rate set by the Czech National Bank plus 14%*. Interest can only be charged for five years.

There is a three year statute of limitations for Czech VAT. There are exceptions to this, for instance, in the case of businesses which commit frequent tax offences the stature of limitations may be extended to ten years.

How can you recover Czech VAT credits?

If there is a surplus of VAT inputs over outputs (more VAT incurred than charged), then a Czech VAT credit arises. In principle, this is due back to the VAT registered business. For EU registered businesses, a recompense application for Czech VAT must be submitted electronically through the website of the country in which the claimant is recognised. Non-EU registered businesses must submit a refund form directly to the Czech tax authorities. Nonetheless, requesting a VAT refund may trigger a VAT audit by the tax authorities.

Czech VAT Invoice Requirements

The Czech Republic VAT rules on the layout and information to be provided on invoices generally follow the requirements of the EU VAT Directive and its VAT invoice requirements.

The date an invoice should be issued and storage of Czech invoices

VAT invoices in the Czech Republic must be issued no later than 15 days following the tax point.

These invoices must be stored for 10 years. The Czech Republic, like all of the EU Member States, now allows the use of electronic invoices under certain conditions.

The Czech Republic tax authorities must be knowledgeable of the method and location of your invoice storage.

Invoice requirements in the Czech Republic

The following basic information must be on invoices:

  • The date the invoice was issued,
  • To have a unique, sequential number,
  • The VAT number of the supplier and customer,
  • The full address of the supplier and the customer,
  • A full description of the goods or services provided,
  • The details of quantity (if applicable),
  • The date of supply, if different from the invoice date,
  • Any discounts or rebate details, if not included in the unit price,
  • The net, taxable value of the supply,
  • The VAT rate applied, and the amount of VAT (to be shown in CZK),
  • The details to support zero VAT- export, reverse charge or intra-community supply,
  • The reference to any special arrangement i.e. travel agents’ margin scheme, second-hand goods, art or antique arrangements.

Finally, the total, gross value of the invoice.

Czech Republic VAT Compliance

After attaining a Czech VAT number, foreign entities are required to follow the local VAT accounting and tax rates. These requirements include:

  • Arranging invoices with the revelation details outlined in the Czech VAT Act,
  • The use of electronic invoices and gaining approvals by customers,
  • The issuing of invoices for goods or services in accordance with the Czech time of supply rules,
  • accounts and records to be maintained and must be held for at least 10 years,
  • the use of approved foreign currency rates,
  • processing of credit notes and other corrections.

What is the tax point for the Czech VAT?

The tax point (time of supply) rules in the Czech Republic decide when the VAT is due. With this information it is then payable to the Czech tax authorities 15 days after the VAT reporting period end (monthly or quarterly).

For most goods supplied, this is the time of delivery or passage of title. It is then the completion of the service, for services.

Czech Republic VAT Rates

The standard VAT rate in Poland is 21%*; reduced rates are 15%*, 10%* and 0%*.

There are also reduced rates of 15%* rate for foodstuffs (not including necessary child nutrition); some soft drinks; take away food; water supplies; medical equipment for disabled persons; children’s car seats; some domestic passenger transport; some books (excluding e-Books); admission to cultural events, shows and amusement parks; writers and composers; social housing; renovation and repair of private dwellings; cleaning of private households; some agricultural supplies; hotel accommodation; admission to sporting events; use of sporting facilities; social services; supplies to undertaker and cremation services; medical and dental care; domestic care services; firewood; some pharmaceuticals; some domestic waste collection and street cleaning. 5%* rate for foodstuffs classed as necessary child nutrition; newspapers and periodicals; pharmaceutical products; some books. 0%* rate for intra-community and international passenger transport.

If there is a failure to apply the correct VAT rates on Czech invoices will leave companies wide-open to meeting the difference, as well as penalties and late interest payments. VAT rates are set by the Czech government, but follow the general rules for the use of the standard and reduced VAT rates.

What is the tax point for Czech VAT?

The tax point (‘time of supply’) rules in the Czech Republic regulate when the VAT is actually due. It is then due to the tax authorities 15 days after the VAT reporting period end (‘monthly’ or ‘quarterly’).

For most ‘goods’, it is the time of delivery, or passage of title. For ‘services’, it is the completion of the actual service.

The Czech Republic – Intrastat

Intrastat reporting fills the gap left by the removal in 1993 of customs reporting on the movement of goods within the EU. It empowers governments and the EU to track the trade between countries for statistical purposes. Increasingly, it is also being used as a check on possible VAT fraud.

Foreign companies trading in Poland in addition to VAT returns, might be required to complete statistical reports called ‘Intrastat’, giving information on the movement of goods across the national borders. This can contain both sales to other companies, but also the movement of goods by the same company.

When should Czech ‘Intrastat’ reports be completed?

There may be a requirement to complete monthly ‘Intrastat’ reporting, if resident or non-resident companies move goods across the Polish national border to or from other EU countries.

‘Intrastat’ filings list goods which are sent out of the Czech republic, called ‘dispatches’, as well as goods brought into the Czech Republic, called ‘arrivals’. This system was introduced at the time of the 1993 launch of the EU free trade market, due to customs borders and reporting being withdrawn. ‘Intrastat’ does not relate if the goods are coming in from outside of Europe (‘imports’) or being sent out of the EU (‘exports’).

The Czech ‘Intrastat’ reporting thresholds are…

‘Intrastat’ returns only require to be concluded once the reporting thresholds are exceeded.

Czech ‘Instrastat’ reporting threshold for goods is set at CZK 8.000.000* (arrivals) and CZK 8.000.000* (dispatches).

What information should be included on a Czech ‘Intrastat’ filing?

For each movement of goods across the Czech national border to another EU country must be listed.

The shipment lists should include:

  • The trade classification,
  • The reference period (reporting month),
  • The quantity and the value,
  • The means of transport and delivery conditions,
  • The weight,
  • The commodity code,
  • The country of origin (where the goods were made or processed),
  • The Member State of arrival or dispatch.

When should you file Czech ‘Intrastats’?

Monthly ‘Intrastats’ should be submitted electronically on the 12th of the month following the movements.

There might be infringement penalties up to CZK 50.000* for late filings.

The Czech Republic – EC Sales Lists (ECLs)

If a Czech VAT registered business, resident or non-resident, is selling goods or services to other VAT registered companies within Europe, then an EC Sales List (ESL) return might be required. These are also known as recapitulative statements. This would be in addition to the regular Czech VAT return or Czech ‘Intrastat’.

When should Czech EC Sales List reports be completed?

When a Czech VAT registered business concludes an intra-community supply, i.e. the sale to another EU VAT registered business of goods or services across the Czech border, then this might have to be reported in the ESL. There is no reporting threshold.

In the Czech Republic, ESLs should be filed on a monthly basis for intra-community supply of goods. For the supply of services, the returns can be filed quarterly, provided that the business supplies no goods and also has a quarterly VAT return period. The Czech filing date is the 25th of the month following the reporting period (monthly/quarterly) end.

Czech ESL filings should be made online. There can also be a fine of up to CZK 50.000* for late or incorrect Czech ESL filings.

Czech Republic Intrastat & EC Sales Lists (ECLs)

Intrastat reporting fills the gap left by the removal in 1993 of customs reporting on the movement of goods within the EU. It empowers governments and the EU to track the trade between countries for statistical purposes. Increasingly, it is also being used as a check on possible VAT fraud.

Czech Instrastat Reporting Threshold for goods is set at CZK 8.000.000* (arrivals) and CZK 8.000.000* (dispatches).

Reference period shall be the calendar month, in which intra-community trade took place (dispatch or arrival of goods). There is a possibility to submit information for a period shorter than one month in form of partial declaration, however, all partial information must in total cover the full monthly reference period.

Intrastat declaration for a given reference period shell be submitted by 10th day of a month following the period of intrastat declaration.

Final partial declaration for a given reporting period must be filed by 10th day of a month following the period of intrastat declaration.

Like ECL’s, it is detached from the EU VAT returns and reporting process, although created on the same data.

What goes into intrastat declarations?

Instrastat filings require details of all dispatches (sales) of goods to other EU countries, plus the arrivals (purchases). The details required for each transaction should include:

  • The description of the goods,
  • product code of the goods,
  • quantity and the value of the goods,
  • delivery terms,
  • the country of departure and arrival (using country codes),
  • along with any shipment costs.

When to submit intrastate reporting?

There are annual reporting threshold for each EU country. These can also be different for dispatches from a country (sales) vs. arrivals (purchases) within the same country. These thresholds are much higher than that of VAT Registration Thresholds.

Intrastat reporting is virtually always monthly across the EU. Filings are commonly started at the same time as the VAT return, and are sent to the proper statistical office for the country concerned.

Additional supplementary reporting obligation for company’s selling across EU borders is the EC Sales List (ESL). This provides details of sales or transfer of goods and services to other VAT registered companies in other EU countries. The tax authorities around Europe use ESL’s to check that VAT is being correctly and entirely declared by all parties in cross-border transactions.

What goes into the ESL?

  • The names of European Union customers,
  • their VAT numbers,
  • their country code,
  • along with the value of sales, or of credit notes, within the reporting period.

ESL’s are usually filed with the EU VAT return. EU countries have different reporting frequency – monthly or quarterly, with most filings being electronic.

All of the above information is correct as of October, 2017 and also specifically highlighted with *.