Changes in VAT Czech Republic coming into effect from 1 January 2024

Changes to the VAT tax regime in the Czech Republic from 1 January 2024 have a significant impact on e-commerce entrepreneurs. This market, which is also increasingly attractive to Polish online sellers, requires special attention in the face of the new regulations. The increased interest in this sector from large e-commerce platforms such as Amazon or Allegro, or companies such as Baselinker, further emphasises the need to be familiar with tax regulations and accounting methods in the Czech Republic. This article will focus on the main changes and their implications for online sellers.

VAT rates in the Czech Republic: New regulations

The Czech VAT system included a basic rate of 21%, two reduced rates of 15% and 10%, and a zero rate for international passenger transport. However, from 1 January 2024, there have been significant changes to these rates.

• The standard VAT rate: remains unchanged at 21%.
• Reduced VAT rate: The existing rates of 15% and 10% are consolidated to a single rate of 12%.
• Zero VAT rate: This continues to apply to selected services related to, inter alia, international passenger transport.

These changes have significant implications for the e-commerce industry in the Czech Republic, especially for those selling goods and services subject to a reduced VAT rate.

Changed VAT rate in the Czech Republic for selected products and services

As of 1 January 2024, revised VAT rates for certain goods and services are effective. Below are some of the most important ones:

• The VAT rate for books, previously 10%, has been reduced to 0%.
• Non-scheduled bus and tourist transport, which was previously subject to a VAT rate of 21%, is now subject to a consolidated rate of 12%.
• Goods and services such as child car seats, construction work, food products (excluding beverages), medical devices, pharmaceutical products and funeral services, which were taxed at 15%, are now subject to a VAT rate of 12%.
• The VAT rate for certain goods and services that were previously taxed at 10% has increased to 12%. This includes accommodation, catering, plumbing, heating, regular passenger transport, gluten-free products, magazines and newspapers, medicine and tickets for cultural events.
• The VAT rate for beverages, firewood, flowers and contractor and municipal waste management services increased from 15% to 21%.
• The largest increases in VAT, from 10% to 21%, included bicycle repairs, cleaning, draft beer, barber and hairdressing services, rental activities, shoemaking services and sauna activities.

VAT registration and accounting in the Czech Republic: key issues

The Czech Republic is becoming an increasingly popular destination for e-commerce companies, influenced in part by the opening of Amazon FBA fulfillment centers in the Czech Republic and the entry of German marketplace Kaufland.de into their market. However, entrepreneurs with e-commerce operations in the Czech Republic need to understand when VAT registration is required and the obligations this entails.

• VAT registration: This is required if you import goods into the Czech Republic, if you have a warehouse in the Czech Republic for shipping products and if you exceed the limit for international transactions in the European Union, which is EUR 10,000. It is worth mentioning that exceeding this limit is a prerequisite for VAT registration in the Czech Republic only if the seller does not use VAT OSS – however, if the seller is registered for VAT OSS and does not have a warehouse in the Czech Republic, VAT registration is not required.
• Deadlines for submission of returns: VAT returns and payments are submitted monthly, although quarterly accounting is possible for smaller businesses.

Find out more about VAT in the Czech Republic on our website: Czech Republic VAT – The Rates & Registration.

Summary

The changes to the Czech VAT system coming into effect from 1 January 2024 are of significant importance for e-commerce entrepreneurs. Understanding these changes and adapting appropriately to the new tax rules are key to remaining competitive in the Czech market. One important aspect of optimizing an e-commerce business is the accurate selection of the VAT rate. It is worth noting that differences in tax rates between Poland and the Czech Republic can be a significant factor. It is often the case that the possibility of benefiting from a reduced VAT rate in the Czech Republic is not equivalent to its use in Poland, and vice versa. Therefore, it is important for entrepreneurs to be aware of these subtle differences and to consult experts to avoid misunderstandings and to ensure compliance with the applicable regulations. In this context, our company is ready to provide professional support and advice: Contact us – amavat ®.

With amavat®, you can focus on running your e-commerce business, safe in the knowledge that all accounting and tax matters will be properly taken care of. Our expertise and experience allows you to take care of your finances, giving you peace of mind and time to do what you do best – grow your business!

WE ARE HERE FOR YOU!

amavat^® Team