Czech VAT for foreign businesses – the essentials

A practical overview of when VAT applies, when to register, and how to avoid common mistakes.

The basics

Czech VAT (DPH, daň z přidané hodnoty) is the Czech implementation of the EU VAT system. The standard rate is 21%, with a single reduced rate of 12% and a 0% rate on books and similar publications.

How EU VAT works, briefly

If you’ve only dealt with US sales tax, VAT works differently and the difference matters.

VAT is charged at every step of the chain, but businesses don’t ultimately pay it. You charge VAT on what you sell (output VAT), you pay VAT on what you buy (input VAT), and every month or quarter you pay the tax office the difference. If you bought more than you sold, the difference comes back to you.

So VAT is not a cost to a registered business. It’s a cost to the final consumer, and businesses in between act as collectors.

Two consequences worth understanding before you read the rest:

• Being VAT-registered is not automatically bad. It means paperwork, but it also means you reclaim the VAT on everything you buy. For a business with real costs, that either saves you money or lets you price lower, because the input VAT stops being a cost.
• The rules are EU-wide in structure but national in detail. The directive is shared, so the concepts (input tax, reverse charge, place of supply, OSS) are the same everywhere. The rates, thresholds, deadlines and filing formats are set by each country. Czechia’s are set out below.

Whether you need to deal with Czech VAT depends on what you’re selling, to whom, and how.

Two things changed recently and a lot of older guidance hasn’t caught up: the reduced rates merged into one in 2024, and the registration threshold moved to a calendar-year test in 2025. Both are covered below.

Do you need to register for Czech VAT?

You probably need to register if:

• You have a Czech company (s.r.o.) and your turnover crosses one of the two thresholds below
• You’re selling goods to Czech consumers (B2C) from stock held in Czechia
• You’re providing certain services that are taxable in Czechia
• You’re importing goods into Czechia

The two turnover thresholds

Since 1 January 2025 the turnover test runs on the calendar year, not a rolling 12 months. There are two levels, and which one you cross decides when you become a VAT payer.

Either way, you have 10 working days from crossing the threshold to file the registration application. If you cross the lower threshold you can also choose to register straight away rather than waiting for January.

The 2,536,500 CZK figure looks odd because it is the Czech crown equivalent of the EU’s €100,000 limit for small businesses.

If you’re below 2,000,000 CZK, you can stay outside the VAT system under the small business exemption.

You probably don’t need to register if:

• You’re invoicing Czech businesses (B2B) from abroad for services – usually reverse charge applies
• You’re below the threshold and choose not to register voluntarily
• You’re selling digital services to Czech consumers via the OSS (One-Stop Shop) scheme

You might want to register voluntarily if:

• You want to reclaim Czech VAT on purchases
• Your Czech clients prefer dealing with VAT-registered suppliers
• You’re building credibility in the market

Key concepts

Reverse charge (přenesení daňové povinnosti)

For many B2B services between EU countries, the buyer (not the seller) accounts for VAT. This is reverse charge.

If you’re a foreign company selling services to a Czech business, you typically invoice without VAT, and your Czech client handles the VAT on their end.

Your invoice should say: “Reverse charge – VAT to be accounted for by the recipient”, or wording to that effect. See invoicing Czech clients for everything else a Czech invoice needs.

Place of supply

VAT is charged where the service or goods are “supplied” for tax purposes. For services, this is usually:

• B2B: where the customer is established
• B2C: where the supplier is established (with exceptions)

For goods, it depends on where they’re shipped from and to.

This gets complicated quickly. If you are unsure, get advice.

One-Stop Shop (OSS)

If you’re selling digital services or distance-selling goods to EU consumers, you can use the OSS scheme to report and pay VAT in one place (your home country), instead of registering in each EU country.

For e-commerce businesses this saves a lot of work.

VAT for software and SaaS

For VAT purposes, software and SaaS are “electronically supplied services”. What you owe depends on who your customer is and where they are.

Selling SaaS to Czech businesses

The place of supply is the customer’s country, so reverse charge applies. You invoice without VAT, show both VAT numbers, and add a note that reverse charge applies. Your Czech customer accounts for the VAT themselves. You do not need to register in Czechia for this.

One thing to get right: check your customer’s VAT number in the EU’s VIES database before you invoice. If the number is not valid, reverse charge does not apply and you may end up owing the VAT yourself.

Selling SaaS to Czech consumers

Digital services to consumers are taxed where the consumer is, so Czech consumers means 21% Czech VAT.

There is one EU-wide threshold of €10,000 per year, covering your total B2C digital sales across all EU countries combined, not per country:

• Below €10,000: charge your own country’s VAT rate.
• Above €10,000: charge each customer’s national rate, so 21% for Czech consumers. Rather than registering in every country, use OSS and file one return in your home country.

If your company is outside the EU, there is no threshold. You must register from your first sale to an EU consumer, normally through the non-Union OSS scheme.

The identified person trap

This one catches almost every small software company in Czechia, and very few people are warned about it.

Say your Czech company’s turnover is well under 2,000,000 CZK, so you are not a VAT payer. You still have to register as an identified person if you either:

• supply services to a business in another EU country, or
• buy services from a business in another EU country

That second one is the problem. Buying Google Ads, AWS, a Slack subscription, or almost any foreign SaaS tool triggers it. Registration is due within 15 days of the first such transaction, and the penalty for missing it runs up to 500,000 CZK.

Being an identified person is not the same as being a full VAT payer:

• You get a VAT number, but only for cross-border transactions
• You do not charge Czech VAT on your domestic sales
• You cannot reclaim input VAT, which is the part people find unfair
• You pay Czech VAT on services bought from abroad under reverse charge, and file a return for the months in which that happens

So it is an obligation with no benefit attached. If you are going to end up dealing with VAT paperwork anyway, working out whether full voluntary registration is better for you is worth an hour of an accountant’s time.

Custom development, licences and physical media

• Custom development for a business is a service. B2B place of supply is the customer’s country, so reverse charge applies.
• Software on physical media counts as goods, not services, and follows different rules.
• Mixed contracts covering a licence plus support plus hosting may need splitting, because the parts can be treated differently. Get these reviewed rather than guessing.

Czech VAT rates

Two things surprise people here.

Books, brochures, audio recordings and related products are zero-rated. Czechia is one of very few EU countries applying 0% here, and the category is wider than just books: picture books, drawing templates and coloring books, brochures, sheet music, maps and atlases, and audio recordings of any of those, so audiobooks are included. Printed and most electronic versions both qualify, but a publication carrying too much advertising does not, so a sales catalog printed as a brochure will not get the zero rate.

There is only one reduced rate. Until the end of 2023 there were two, at 10% and 15%. The 2024 reform merged them into a single 12% rate. Guidance written before 2024 will be wrong, and a lot of it is still online.

Registration process

If you need to register for Czech VAT:

1. Submit the application to your local tax office (Finanční úřad). If you do not have a Czech company yet, start with how to register a company in Czechia.
2. Provide documents: company registration, description of business activities, expected turnover
3. Wait for approval: usually 2-4 weeks, but can take longer if they have questions
4. Receive your VAT number: the format is CZ followed by your company number

You can register voluntarily even below the threshold, and it often makes commercial sense.

A warning about voluntary registration

Voluntary registration usually takes longer than mandatory registration, and the tax office may refuse it.

When you register because you crossed a threshold, the tax office has no choice in the matter. When you volunteer, they may want to see that you’re a real business with real Czech activity: contracts, invoices, a plan, evidence you’ll actually make taxable supplies. Expect questions, and expect it to take several weeks longer than the 2 to 4 weeks above.

The delay causes real problems, because you do not know your registration date until it is confirmed:

• Invoicing in the meantime is difficult. Until you are registered you must not charge VAT. If your registration is later backdated, invoices you have already issued may need to be corrected.
• Clients get confused. A Czech client who expects a VAT number on your invoice and does not find one will ask their accountant, and their accountant will ask you.
• You can’t reclaim input VAT on purchases made before your registration date, so planning a large purchase around an uncertain date is risky.

Practical advice: start the registration well before you need it, don’t promise clients a VAT number until you have one, and if the tax office goes quiet, follow up rather than waiting. If you have little Czech activity to show on paper, having someone local handle the correspondence makes a real difference to how quickly it moves.

Ongoing obligations

Once VAT-registered, you must:

File VAT returns

• Monthly by default. You can switch to quarterly once you’ve been registered for a few months and your annual turnover is under 15 million CZK. That ceiling was 10 million until 2025.
• Due by the 25th of the following month
• Electronic filing only, in a prescribed XML format, through the tax administration’s portal or your data box

Everything is filed electronically, in XML

There is no paper option and no PDF option. VAT returns and control statements must be submitted electronically, in the tax administration’s prescribed XML format, through its portal (MOJE daně / EPO) or your data box.

A filing in the wrong format is treated as not filed at all, with the penalties that follow. The XML schema also changes when the law changes, which is the practical reason the next section matters.

Submit control statements (kontrolní hlášení)

• Always monthly for companies, even if you file VAT returns quarterly. This is easy to get wrong. Quarterly returns do not mean quarterly control statements.
• Every invoice over 10,000 CZK is reported individually, with the other company’s VAT number, the invoice number, and the exact tax amounts
• Due by the 25th of the following month
• Same rule as returns: electronic XML submission only
• Penalties run from 1,000 CZK to 500,000 CZK depending on what you missed and how often. They’re largely automatic.

Keep records

• All invoices (issued and received)
• Evidence of transactions
• Retain for 10 years

Pay VAT, or get paid

You pay the difference between the VAT you collected and the VAT you paid. Due with the return, and late payment incurs interest.

If the difference is negative, the money comes back to you. More input VAT than output VAT gives you an excess deduction (nadměrný odpočet), and the tax office refunds it to your bank account. You don’t have to apply for it, it follows from the return.

• Refunds normally arrive within about 30 days of the return being assessed
• Under 200 CZK, you can carry it forward against the next period instead
• Claiming a refund makes questions from the tax office more likely. If they open a verification procedure, the refund is held until it finishes, which can take months. Make sure your invoices are in order before claiming a large refund.

This matters most in your first months of business, when you are buying equipment and paying setup costs but not yet selling much. Those months usually produce a refund.

Common mistakes

Not registering when required

If you should be registered but aren’t, you’re liable for unpaid VAT plus penalties.

Wrong VAT treatment on invoices

Charging VAT when you shouldn’t (or not charging when you should) creates problems for both you and your clients.

Missing control statement deadlines

These penalties are automatic and add up quickly. Don’t miss them.

Forgetting reverse charge

If you’re invoicing Czech B2B clients from abroad, make sure your invoice clearly states that reverse charge applies.

Not reclaiming input VAT

If you are registered, you can reclaim VAT on business purchases. That money is yours, so do not forget to claim it.

VAT for foreign companies without Czech establishment

If you’re not established in Czechia but make taxable supplies there, you may need to:

• Register for Czech VAT (no threshold applies – registration required from first taxable supply)
• Appoint a tax representative (for non-EU companies)
• File returns and control statements

This applies, for example, if you’re selling goods from a Czech warehouse or providing certain services to Czech consumers.

Special cases

E-commerce and digital services

Use the OSS scheme if you can. It removes most of the paperwork.

Events and conferences

If you’re organizing events in Czechia, VAT rules depend on whether attendees are businesses or consumers.

Real estate

Specific rules apply. Generally taxable, but some exemptions exist.

Goods in customs warehouses

Exempt until released for free circulation.

If your situation is complicated, get specialized advice.

Don’t do this by hand

Czech VAT is not something to manage in a spreadsheet. It is one of the more demanding VAT systems in the EU, because of how much reporting it requires.

What you are dealing with:

• Returns and control statements in a fixed XML format, with no manual alternative
• Control statements listing every invoice over 10,000 CZK, which the tax office cross-checks against what your suppliers and customers reported
• Rules and file formats that change whenever the law does, which has been often: rates in 2024, thresholds in 2025
• Automatic penalties from 1,000 CZK to 500,000 CZK when something is late or wrong

Use current, properly maintained accounting software, and an accountant who works with Czech VAT daily. Pohoda, Money, Helios and similar Czech packages exist because they track these changes and generate the right XML. International tools often don’t produce a valid Czech control statement at all.

Two things go wrong most often:

• Software that has not been updated. An old version produces last year’s file format, so your filing is rejected and you are penalized for something you thought was done.
• A foreign accountant handling it from abroad. They may be very good, but Czech control statements work differently from most countries, and the tax office writes to you only in Czech. See dealing with Czech authorities for what that is like in practice.

Doing it properly costs far less than fixing an incorrect control statement afterwards.

Practical tips

• Use an accountant who knows Czech VAT, and current software. Mistakes are expensive.
• Set up proper invoicing from day one with correct VAT treatment
• Calendar your deadlines – especially control statements
• Keep good records – the tax office may ask for details years later
• Ask before you act – if you are unsure, check with your advisor before you invoice

Official sources

When you need the actual rules rather than an overview:

• Czech VAT Act, No. 235/2004 Coll., in English – the law itself. Heavy going, but it is the source everything else is based on.
• Financial Administration: Value Added Tax – the tax office’s own English pages, including forms and filing information.

If this guide and those sources disagree, they are right and we are out of date. Tell us and we will fix it.

Next steps

Need help understanding how Czech VAT applies to your business? We can point you in the right direction or connect you with experienced tax advisors.

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VAT rules are complex and change. This guide is for orientation – always verify with a tax professional.