Valued Added Tax (VAT) in Czechia (Czech Republic) was introduced in 1993 and is directly administered by the Ministry of Finance. The local name of the VAT is Daň z přidané hodnoty (DPH), while its legislative framework is mainly included in two Acts:
a) Act No. 235/2004 (VAT Act), which consist of the basic definitions, registration rules, taxable transactions, exemptions and many other important information.
b) Act No. 280/2009 (Tax procedural code), which regulates the procedural side of tax law (e.g. tax audit process, registration procedure, penalties and others).
In Czechia, the standard rate of VAT is 21%. This is applicable for the supply of goods or services, which are not subject to a reduced rate of VAT.
1st Reduced VAT Rate: 15%
Applicable for the for selected types of goods and services (certain types of sale of food and soft drinks, plants and seeds, animal feed, funeral services etc.)
2nd Reduced VAT Rate: 10%
Applicable for the for selected types of goods and services (e.g. baby food, medicines, drink water, hotel and accommodation services etc.)
Established Entities: Taxable person that has its seat, place of business or fixed establishment in CZ is obliged to register for VAT, if its threshold exceeded a turnover of CZK 1,000,000 within 12 consecutive calendar months. Such entity is obliged to submit a registration form by first day of the second month following the month in which the threshold was reached.
Non-established Entities: Non-established entity is obliged to register for VAT upon performance of the 1st supply in Czechia, within 15 days since the 1st supply took place.
VAT (or DPH) Liability applies to the following transactions:
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An invoice must contain the following particulars:
The periodic VAT returns and payments shall be calculated and paid every month or, in some cases, every quarter.
In case of a new VAT registration a monthly frequency is mandatory. Taxpayer is eligible to change a filling frequency from monthly to quarterly, if the following conditions are met:
Taxpayer is obliged to submit the applicable VAT returns by the 25th day of the month following the relevant periods. If the deadline falls to weekend or a bank holiday, the taxpayer is obliged to submit the VAT return on the next working day at the latest.
In addition a taxpayer is also obliged to submit other VAT related reports. Both VLS and ESL are due by the 25th day of the month (similarly as the VAT return).
Which represents a line-by-line report and contains all the VAT related transactions, which were performed during a month (e.g. domestic sales and purchases, intra-Community acquisitions and others).
The submitted VLS is automatically crosschecked by the Tax Authorities and any kind of discrepancy is questioned by the officers in charge, i.e. transactions reported by the supplier must be reported with the same information by the customer.
In the case if it performed intra-Community supply of goods or services.
Both paper and electronical submission of the VAT return and other related reports are possible. For the e-submission of the returns a taxpayer must posess a hard token or e-filling account, which contain a valid electronic signature of the taxpayer.
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