Information describes the way how a business calculate VAT taxable turnover, what data a business is obliged to keeping in records for the purposes of value added tax, VAT rates in this country and its application on goods and services
How a business should calculate their VAT taxable turnover?
A business has to monitor a domestic turnover either for the purposes of obligation to register as a VAT payer or in order to fulfil one of conditions for cancelation of VAT registration.
For the purposes of VAT Act, turnover shall mean the total consideration without tax (an amount in funds or a price subsidy), to which a business (the taxable person) is entitled for a transaction that has occurred (delivery of goods or provision of services), with the place of transaction in this country, where such consideration is consideration for:
- a taxable transaction and a supply that would be taxable if it were not exempted domestically under the small business regime
- a transaction exempted from tax with entitlement to tax deduction (e.g. such as export of goods or supply of goods to other EU Member State ),
- a transaction exempted from tax without entitlement to tax deduction (financial activities, pension-related and insurance activities, delivery of immovable items and lease of immovable items), if such a transaction is not a supplementary activity pursued occasionally.
The consideration that accrues to the taxable person shall also be deemed to be the amount of the tax base determined pursuant to Section 36 Subsection 6 letter a) or b) of the VAT Act for the supply of goods under Section 13 Subsection 4 letter a) to c) of the VAT Act and Section 13 Subsection 6 of the VAT Act or the provision of a service under § 14(3) and (4) of the VAT Act.
On the contrary, domestic turnover shall not include consideration for the delivery or provision of fixed assets, provided that such provided transaction is not an integral part of the ordinary economic activity of the taxable person, or advances.
If a business calculates a domestic turnover for the purposes of obligation to VAT registration, the individual considerations are calculated in amount without VAT (the total consideration reduced by the VAT), if the consideration includes such tax.
The calculation of the amount of VAT taxable domestic turnover includes the transactions that are carried out within the relevant calendar year (for example from 1st January 2025 to 31th December, 2025).
Information on keeping records of VAT transactions
A business registered as a VAT payer or an identified person, is obliged to record all information relating to his VAT liabilities.
VAT records shall be kept in a structure that allows preparing a tax return, recapitulative statement and control statement.
VAT records contain especially the following information:
- information on supplies carried out by the business, including supplies exempt from VAT,
- for distance sale of goods, the value of goods broken down by country,
- information on purchased goods and services,
- for acquisition of goods from another EU member state, the value of goods broken down by country,
- information on supplies and acquisition of goods under call-off stock arrangements within the EU territory,
- supplies out of scope of VAT,
- an overview of business assets.
List of VAT rates including: standard, reduced, super reduced, parking rate (if applicable)
Currently, two VAT rates apply In the Czech Republic:s:
- a standard rate of 21 %,
- a reduced rate of 12 %.
The statutory conditions for the application of the individual VAT rates are set out in Section 47, 48, 48a and 49 of the VAT Act, including the Annexes relating to the respective VAT rates.
The standard rate (21%) applies to all goods and services unless VAT Act expressely provides that the goods or services are subject to the reduced VAT rate or are exempt from VAT.
The reduced rate (12%) applies to::
- heat and coling,
- selected supplies of residential buildings and social housing as defined in the VAT Act;
- repairs and alterations of residential buildings
- repairs or modifications of medical devices listed in Anex No. 3
- electronically supplied newspapers, magazines and periodicals,
- services listed in Annex No. 2, and
- goods listed in Annex No. 3.
In order to determine the correct VAT rate for goods or services listed in the relevant Annex, the goods or services must correspond both to the customs tariff nomenclature code (for goods) or the CZ-CPA classification code (for services) and to the explicit description for that code set out in the text of the relevant Annex.
Where it is difficult for a business to determinate the VAT rate applicable to a particular taxble supply of goods or services , it may request that the General Financial Directorate issue a binding assessment of the VAT applicable to the relevant taxable supply in accordance with Section 47 (1) of the VAT Act. Such a request is subject to an administration fee.
A detailed description of the specific types of goods and services to which these VAT rates appy can be found in a document published by the European Commission.