Registering for VAT

This information describes the situation in which an entrepreneur or legal entity is liable to register as a VAT payer and also describes a possibility of voluntary VAT registration.

Registration of VAT payer

An entrepreneur or legal entity (hereinafter also referred to as “business”) is a taxable person if he carries out economic activities independently or is a group (Section 5 of the VAT Act). A VAT Act determines the situations in which such taxable person becomes a VAT payer, or when such taxable person is obliged to register for VAT.

A business is obliged to register as a VAT payer, if any of below mentioned conditions are fulfilled:

• If the business has its registered office in the Czech Republic and its turnover in the Czech Republic exceeds CZK 2,000,000 in a calendar year, it becomes a VAT payer
  • ​​​​​​​from the first day of the calendar year immediately following the calendar year in which its turnover in the Czech Republic exceeded CZK 2,000,000, or
  • from the day following the day on which the CZK 2,000,000 threshold was exceeded, provided this was notified to the tax authority in a timely‑filed application for registration, or
  • from the day following the day on which its turnover in the Czech Republic exceeded CZK 2,536,500 in the relevant calendar year, unless it becomes a VAT payer earlier.
• If the above conditions are met, but the business carries out only supplies for which they would have no right to deduct VAT if they were a VAT payer, they do not become a VAT payer under the above rules. However, they become a VAT payer
  • on the first day of the calendar year immediately following the calendar year in which their turnover in the Czech Republic exceeded CZK 2,000,000, if in that calendar year the business carries out supplies that are included in their turnover in the Czech Republic and for which they would have the right to deduct VAT if they were a VAT payer, or
  • on the day following the day on which they carry out a supply that is included in their turnover in the Czech Republic and for which they would have the right to deduct VAT if they were a VAT payer, in the case that this supply takes place after:

1. in the relevant calendar year their turnover in the Czech Republic exceeded CZK 2,000,000 and they notified the tax authority in a timely-filed registration application that they wish to become a VAT payer as of that day,
2. in the relevant calendar year their turnover in the Czech Republic exceeded CZK 2,536,500, or if this supply caused the turnover to exceed that amount, or
3. in the immediately preceding calendar year their turnover in the Czech Republic exceeded CZK 2,000,000.

• A business with a registered office in the Czech Republic whose VAT registration was canceled due to cessation of economic activity becomes a VAT payer again on the day they carry out a supply for which they would be entitled to deduct VAT if they were a VAT payer, provided that in the relevant or immediately preceding calendar year their turnover in the Czech Republic exceeded CZK 2,000,000.
• If a business becomes an owner of a property that will be used for the purposes of carrying out economic activities under a decision on privatization under the Act regulating the conditions of transferring State property to other persons, or from a VAT payer through acquisition of a business enterprise, it shall be a VAT payer from the day of property acquisition.
• A business shall be a VAT payer from the day when the transformation of a legal entity is registered into a public register or an equivalent register maintained under the laws of the given State if the assets of the legal entity being dissolved or split up that was a VAT payer pass or are transferred to such person during the transformation.
• A business that is a group member and makes a taxable transaction, which is the delivery of goods or provision of a service, with the place of transaction in the Czech Republic through its establishment located outside the Czech Republic, except for the transactions the tax on which has to be declared by the person for which such a transaction is provided, shall be a VAT payer from the day when such transaction carries out.
• If a business that is an heir who acquired property from a deceased VAT payer and who continues carrying out economic activities shall be a VAT payer from the day of the passage of the tax liability of the deceased.

If a business is obliged to register as a VAT payer, it must submit an application for registration within 10 working days

• after the end of the calendar month in which the monitored turnover threshold (CZK 2,000,000 or CZK 2,536,500) was exceeded — in the case of registration due to exceeding the turnover threshold (§ 6(1) or § 6(2)(b) of the VAT Act),

• from the day of the supply that is included in the entrepreneur’s turnover in the Czech Republic and for which the entrepreneur would have the right to deduct VAT if they were a VAT payer (registration under § 6(3) of the VAT Act),
• from the day of carrying out a taxable supply (entrepreneur under § 6(4) of the VAT Act),
• from the day they became a VAT payer (payer under §§ 6b to 6ea of the VAT Act).

A business with registered office or place of establishment in the Czech Republic which carries out or will carry out transactions for which it would have the right to deduct VAT if it was a VAT payer may submit an application for registration for VAT on voluntary basis. After that it is a VAT payer from the day following the day of notification of the decision of its registration.

More information about VAT registration is available on the website of the Financial Administration (in Czech language).

Registration of an Identified person

An identified person is a taxable person who carries out economic activities independently or a group (Section 5 of the VAT Act). The statutory conditions for obligatory or voluntary registration of identified person are determined in the VAT Act. If an entrepreneur or legal entity (hereinafter also referred to as “business”) is already registered as a VAT payer, it cannot become an identified person. On the contrary, a business registered as identified person may subsequently become a VAT payer, for example in situation when he exceeds the turnover for obligatory VAT registration (Section 6 of the VAT Act).

A business is obliged to register as an identified person in the following situation:

• If a business that is not a VAT payer or a non-taxable legal entity acquires goods in the Czech Republic from another EU Member State and such goods are subject to VAT tax;  this does not apply to acquisitions by an intermediary in a triangular transaction, or acquisitions of goods from another EU Member State that are exempt from VAT under § 71l of the VAT Act. The person becomes an identified person from the date of the first acquisition of goods subject to VAT. The acquisition of goods from another EU Member State is only taxable once the total value of these goods in the relevant calendar year exceeds CZK 326,000.
• If a business with a registered office or place of establishment in the Czech Republic, that is not a VAT payer, receives a service, delivery of goods with installation or assembly, or delivery of goods via systems and networks, with a place of supply in the Czech Republic from a taxable person not established in the Czech Republic. The person becomes an identified person from the date of receiving the taxable supply, or from the date of payment giving rise to the obligation to declare the tax, whichever occurs earlier.
• If a business with a registered office or place of establishment in the Czech Republic, that is not a VAT payer, provides a service to a taxable person acting as such with a place of supply in another EU Member State, except for the provision of a service exempt from VAT in another EU Member State. The person becomes an identified person from the date the service is provided, or from the date payment for the service is received before its provision if the service is sufficiently defined at the date of payment, whichever occurs earlier.

If a business is obliged to register as identified person, it must submit an application for registration within 15 days from the day when he became an identified person.

A business may also submit an application for registration as identified person on voluntary basis, if such person has a registered office or place of establishment in the Czech Republic, is not a VAT payer and:

• will provide selected services in the special One Stop Shop Scheme (OSS), or
• will acquire goods from another EU Member State, or
• will receive a service, delivery of goods with installation or assembly, or delivery of goods through systems or networks, with a place of transaction in another EU Member State from a non-established person, or

• will provide a service with a place of supply in another EU Member State, except for the provision of a service that is exempted from tax in such other EU Member State.

If a business submits an application for voluntary registration as identified person, it becomes an identified person from the day following the day of notification of the decision of his registration.

More information about VAT registration is available on the website of the Financial Administration (in Czech language).

Group Registration

Personnel- or capital-linked groups, where at least 40% of the share capital or voting rights is held, may form a group.

Group registration is voluntary. For the purposes of the VAT Act, the group is represented by its representative member, who also submits the registration application. Group members who were VAT payers prior to the formation of the group or upon joining the group cease their individual VAT registrations.

A group becomes a VAT payer on 1 January of the following calendar year if the application to register the group is submitted no later than on 31 October of the relevant calendar year. If the application is submitted after 31 October of the relevant calendar year, it is ineffective.

A person who is a VAT payer shall become a member of a group on 1 January of the following calendar year provided that the group agrees and submits an application for membership no later than on 31 October of the relevant calendar year. If the group submits the application after 31 October of the relevant calendar year, it is ineffective.

A person who is not a VAT payer shall become a group member on the first day of the second month following the month in which the group submits an application, with the person's consent, for such person to join the group.

In the case of transformation of a group member where the assets or its part are passed or are transferred to the taxable person, then such taxable person becomes a group member from the day when the transformation of a taxable person is registered into the Commercial Register.

If a member who is a member of another group transfers to a new group, the transfer may occur only on 1 January of the following calendar year, provided both the original group and the transferring member consent and the new group submits the application for transfer by 31 October of the relevant calendar year. If the application for transfer is submitted after 31 October of the relevant calendar year, it is ineffective.

More information about a group is available on the website of the Financial Administration (in Czech language).

Registration of non-established taxable person

For the purposes of a VAT Act a non-established taxable person is a person who:

• does not have a registered office in the Czech Republic,
• carries out a taxable transaction, which is the delivery of goods or provision of a service with the place of transaction in the Czech Republic, and
• does not have a place of establishment in the Czech Republic or has a place of establishment in the Czech Republic, but such establishment does not participate in such transaction.

If the above conditions are met, an entrepreneur or legal entity (hereinafter also referred to as “business”) that does not have a registered office in the Czech Republic and is not registered under the small business regime for the Czech Republic, may be obliged to register as a VAT payer in the Czech Republic in following cases:

• A business that carries out a taxable transaction, which is delivery of goods or provision of a service, with the place of transaction in the Czech Republic, except for a transaction for which the tax shall be declared by the person to whom such transaction is provided or transactions subject to the special One Stop Shop scheme (OSS). The business becomes a VAT payer since the day of taxable supply regardless the amount of turnover.
  • This obligation is also related to situation in which a business sells goods at the distance from another EU Member State to customers (non-taxable persons – not a business) in the Czech Republic and total value of the sales of goods at a distance and TBE services (telecommunication services, radio and television broadcasting services, electronically provided services) into all EU Member States exceeds in the relevant or in the immediately preceding calendar year EUR 10,000, and the place of supply is in the Czech Republic. In such a case, a business shall be a VAT payer from the day of when such transaction takes place.
• A business that delivers goods to another EU Member State and the goods are dispatched or transported from the Czech Republic by such person, the acquirer or authorized third person to a person for which the acquisition of goods in another EU Member State is subject to tax. A VAT payer shall be from the day when such taxable transaction takes place.
• A business that performs delivery of goods for consideration, representing the relocation of goods from the Czech Republic to another EU Member State. A VAT payer shall be from the date of delivery of the goods, provided that the acquisition of the goods in another EU Member State is subject to tax for that person.
• A business shall be a VAT payer from the day when the transformation of a legal entity is registered into a public register or an equivalent register maintained under the laws of the given State if the assets of the legal entity being dissolved or split up that was a payer pass or are transferred to such person during the transformation.
• A business which is an electronic interface operator that provides a taxable transaction distance sale of imported goods with their value not exceeding EUR 150 with the place of transaction in the Czech Republic , with the exception of selected transactions to which the special One Stop Shop scheme applies, is a VAT payer as of the date of providing the taxable transaction (page 5 of the Notice for non-established taxable persons).
• A foreign person who provides delivery of goods to an electronic interface operator with the place of transaction in the Czech Republic is a VAT payer as of the date of delivery of the goods (page 5 of the Notice for non-established taxable persons).

A business that does not have a registered office in the Czech Republic and is not registered under the small business regime for the Czech Republic may be obliged to register as an identified person in the Czech Republic. This could be a case in which a business that is not a VAT payer or a non-taxable legal entity acquires goods from another EU Member State in the Czech Republic and such goods are subject to tax (this does not apply to the acquisition of goods by an intermediary in the course of a triangular transaction, or to the acquisition of goods from another EU Member State that is exempt from tax under Section 71l of the VAT Act). An identified person shall be from the date of first acquisition of goods that is subject to tax. The acquisition of goods from another EU Member State is subject to tax in the moment when the total value of the acquired goods without tax exceeds CZK 326.000 in the respective calendar year. In this case a business may submit an application for registration for VAT on voluntary basis in advance.

If a business that does not have a registered office in the Czech Republic is obliged to register as VAT payer, it has to submit an application for registration within 10 working days from the day on which it became a VAT payer.

A business that does not have a registered office in the Czech Republic and is not registered under the small business regime for the Czech Republic and carries out or will carry out transactions with entitlement to VAT deduction may submit an application for registration for VAT on voluntary basis. After that it is a VAT payer from the day following the day of notification of the decision of his registration.

More information about VAT registration of non-established persons is available on the website of the Financial Administration in Czech or English language.