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Who may be required to register as a VAT payer?

Obtaining an EU VAT certificate and VAT registration applies to businesses that:

• import goods to the Czech Republic,
• purchase and sell goods to other Member States of the European Union (so-called intra-Community transactions: intra-community acquisition of goods and intra-community delivery of goods),
• purchase and sell goods in the Czech Republic,
• store goods on the territory of the Czech Republic for resale,
• organise live events, exhibitions, conferences, etc. in the Czech Republic,
• conduct distance sales to the Czech Republic in excess of a limit of EUR 10,000 per annum (this is the pan-European limit).

The standard accounting period for VAT in the Czech Republic is one month. Businesses whose annual turnover does not exceed the threshold of CZK 10,000,000 may apply to file quarterly returns. The deadline for submission of the return and payment to the tax office for VAT is the 25th day of the month following the end of the accounting period. Annual/summary declarations are not required.

In addition to the standard VAT return, businesses are required to submit an additional return: Control Report "Kontrolní hlášení". This is the equivalent of the Polish Single Audit File (JPK). Only local sales and local purchases are reported in this declaration.

In the event of an incorrect or untimely declaration, foreign entities face fines equivalent to the value of potentially lost revenue, with a maximum penalty of CZK 300,000. Inaccurate and incorrect settlements may result in a 20% additional tax liability. In addition, additional interest is charged for late payment of VAT. Failure to register for VAT on time also results in an arrearage and a penalty (for late payment) and interest from the date of compulsory registration.

Foreign entities operating in the Czech Republic must also comply with rules on, among other things: invoicing and archiving invoices and records for a period of 10 years.