info@tradelicense.cz Whatsapp (message only) +420 733 480 880 (EN, DE, CZ, NL) Tradelicense.cz - by the founder of Alexio.cz Expat Accountant
  1. Home
  2. Knowledge Base
  3. VAT Registration

VAT Registration TYPES IN CZECH REPUBLIC

When to register for VAT for a Trade License or SRO company

VAT regulations are becoming more complex by the year. Surprisingly, it is not the Czech government but the EU that is responsible for most changes. Therefore, it is clever to determine if you need to be VAT registered, and if so, in what way.

In Czech Republic there are 2 main types: 'Full VAT' (Plátce DPH) and 'VAT-light' (Osoba identifikovaná k Dani).

VAT Registration: obligatory vs voluntary Full VAT

  • If your revenue from CZECH SOURCES exceeds 2.000.000 CZK within 12 months (not per calendar year, but per 12 months). You will have the obligation to register for Full VAT. Before 2023, this limit was 1.000.000 CZK .
  • If you invoice to EU-BASED COMPANIES services or goods, you have the obligation to register for VAT-Light - even for a single 500 EUR invoice. If you already have a Full VAT-registration, you do not have to register again for VAT-Light.
  • Theoretically, it is possible to register voluntarily for Full VAT, for example if you expect large expenses with VAT but you did not reach the Revenue limit yet. It must be said that most of the time (>90%) a request for voluntary registration for Full VAT is denied,


VAT Registration: obligatory vs voluntary VAT-Light

  • If you are already invoicing to EU-BASED COMPANIES services or goods, you have the obligation to register for VAT-Light - even for a single 500 EUR invoice.
  • A voluntary VAT-light registration is possible for future business - but in practise it is much easier to prove the need for an obligatory registration in the form of an existing EU B2B invoice, rather than trying to convince the Tax Office of a future need.
  • Even if you are VAT-Light registered, inside Czech Republic you are still regarded a VAT-less entity, so you still DO NOT add VAT to invoices to Czech clients.
  • Inside Czech Republic you are still regarded a VAT-less entity, so you CAN NOT claim any VAT to Czech expenses and for EU expenses with 0%, you will have to declare and pay 21% Czech VAT.


VAT Registration: cars, tobacco, alcohol, fuel, high-value goods.

  • Importing from the EU: cars, tabacco, alcohol, fuel or goods exceeding a value of 326.000 CZK. -> special cases. Subject to special VAT rules and Excise taxes, with lots of paperwork. When importing from outside the EU there will also be Import tax / Customs Duty (CLO).


Buying goods / services in the EU

Generally speaking, goods / services are sold B2B with 0%. Unfortunately, because of the strange dual Full VAT vs VAT-Light system in Czech Republic (most EU countries have only one registration type resembling Full VAT) a Czech business with VAT-Light always gets a raw deal - they end up paying 21% VAT to the Czech Tax Office for any 0% VAT purchase from the EU, a problem that does not exist if the business would not be in Czech Republic (!)

Selling goods / services locally in the EU, the One Stop Shop (OSS) system

Previously, once a certain local sales limit was reached in a country (10.000 EUR, for example) it was necessary to get a VAT number in that country. This is no longer necessary.

Now one VAT number in one EU country is enough to file a VAT Return for all EU countries (restrictions apply) in the OSS (One Stop Shop) system. Most of our clients provide remote services, and therefore have no dealings with the OSS (fortunately).


Full VAT and VAT-light filing obligations

A Full VAT registration means that you will have to file a VAT Report and Kontrolní Hlášení EACH MONTH, for a period of 2 years, even in the months that you did not conduct any business.

Typically, 21% VAT is charged on invoices to Czech clients (private individuals and businesses). The 21% VAT on expenses can be claimed back. Both invoices and expenses need to be processed for the monthly VAT Return and KH.

In addition, in case you sell into the EU, you will have to file a Souhrné Hlášení VIES (EC Sales List) (see below).

With a VAT-light registration, you invoice with 0% under the 'Reversed Charges scheme' (an EU directive). Note that you do not actually charge VAT, nor have to send VAT to the Tax Office.

An invoice with 0% VAT is, however, not the same as an invoice without VAT. 0% VAT - for invoicing within the EU, "no VAT" - for invoicing outside the EU and Czech Republic.

A benefit of the VAT-Light is that you only need to file in the months a transaction with an EU B2B client took place (so not every month, as with a Full VAT registration).

Downsides of VAT-Light are:
  • You cannot claim any VAT back on Czech expenses.It is like having no VAT registration inside Czech Republic at all.
  • Worse: if you buy a good or service with 0% VAT from an EU supplier, you must report this in a VAT Return and send the 21% Czech VAT to the Czech Tax Office


Kontrolni Hlaseni - VAT reporting in CZ. For Full VAT only

In case you are Fully VAT-registered and your Czech supplier charges Czech VAT, a Kontrolni Hlaseni needs to be filed for each transaction over 10.000 CZK. Simply put, it is a table, with on each line each separate transaction in Czech Republic. Good practise is to file always a KH, even if no transactions took place during that month.

Souhrné Hlášení VIES / EU Sales List. For both Full VAT and VAT-Light

In case you are VAT-registered (any kind) and your VAT-registered customer is based in the EU, an electronic EU Sales Lists need to be filed. Simply put, it is a table, with on each line all transactions combined with 1 customer. In most cases, 0% VAT is charged.

Filing - electronic only

The VAT Return, Kontrolní Hlášení and Souhrné Hlášení VIES cannot be filed in paper form anymore, but only sent as electronic files, which need to be generated by accounting software or manually entered though the online portal of the Czech Tax Office (in Czech, of course).

There are also several online invoicing systems that also do VAT filing. Our experience is that even though the software seems easy to operate - clients make small mistakes and we've had several cases of having to fix VAT Returns from 2020 till now.

It seems overkill to hire an accountant for processing one (consultancy) invoice per month - but wrong / late filing is subject to penalties that can be 10.000s of CZK. So one really has to know precisely how to create invoices and use the software / portal (!)

A collection of Wrong Information - even heard from Czech accountants!

  • You only need to register for VAT-Light if you have reached 1.000.000 CZK
  • You can register for quarterly VAT-light
  • You can file VAT Returns 1x per year, like the Income Tax Return
  • It is not necessary to register for VAT-Light, just put 'no VAT' or '0% VAT' on your invoice and you will be fine
  • You can buy from the EU with 0%, it is not necessary to file for & pay Czech VAT
  • If you do the 60/40 accounting method, you can not claim VAT back (Full VAT)
People advising such things usually have no idea what they are talking about - poor advice *will* cost you money in the form of penalties and backward filing (more money than to do it right from the start) - just pay a proper accountant instead of random expat service providers.

For more information on VAT regulations and invoicing abroad Book a Consultation, by ZOOM / Skype / Whatsapp / Phone or by email.