Czech VAT 2025 changes

• The VAT turnover period will now be calculated annually from January 1 to December 31. Entities with turnover between CZK 2,000,000 and CZK 2,536,500 will become VAT payers the following year, while those exceeding CZK 2,536,500 will be liable two days after surpassing this threshold. The reverse charge mechanism will expand to cover certain cleaning services.
• Real estate rules are simplified by abolishing the five-year exemption limit and reducing the substantial change threshold from 50% to 30% of the property’s value.
• The time limit for claiming VAT deductions is reduced from three to two years, and the time limit for correcting the tax base is extended from three to seven years, unaffected by legal proceedings.
• Additionally, there is a new requirement to refund tax deductions on liabilities outstanding for over six months.
• The CZK 2,000,000 car deduction limit may be revised or removed in 2027.

Czech VAT rules

The Czech Republic’s VAT (Value Added Tax) system is aligned with EU regulations. The standard VAT rate is 21%, applied to most goods and services. There are two reduced rates: 15% and 10%. The 15% rate covers items such as foodstuffs, certain health products, and social housing. The 10% rate applies to items like books, pharmaceuticals, and infant food.

Businesses must register for VAT if their taxable turnover exceeds CZK 2,000,000 (approximately €80,000) in 12 consecutive months. Voluntary registration is possible if turnover is below this threshold. Foreign businesses without a fixed establishment in the Czech Republic but providing taxable supplies must also register for VAT.

VAT returns are typically filed monthly or quarterly, depending on the turnover. Returns must be submitted electronically by the 25th day of the month following the tax period. Intrastat declarations are required for businesses involved in intra-EU trade exceeding specified thresholds.

VAT on most transactions is chargeable at the point of supply, meaning when goods or services are delivered. However, reverse charge mechanisms apply to certain cross-border and domestic transactions, shifting the tax liability from the supplier to the customer.

Tax audits are conducted by the Financial Administration of the Czech Republic to ensure compliance.