Financial turnover for VAT: how to calculate it and when it makes you a VAT payer

Quick overview

• Turnover for VAT is the sum of your receipts excluding VAT for transactions in the Czech Republic in a calendar year.
• Once you exceed CZK 2,000,000 in a calendar year, you will be obliged to register for VAT (normally from 1 January of the following year).
• If you exceed CZK 2,536,500, you become a taxpayer immediately – from the day after you exceed it.
• The turnover does not include, for example, one-off sales of property or transactions outside the Czech Republic.
• The decisive factor is not when you receive the money, but when you made the transaction.

If you are not sure exactly what to count as turnover or when you are obliged to register, you can consult us.

What is turnover: the difference between turnover for VAT and turnover in the accounts

In common parlance, we call almost any kind of revenue turnover. But the law works with precise terms. For VAT, turnover is governed by the VAT Act and means the total of the payments, excluding tax (i.e. VAT), that you are entitled to for transactions with a place of supply in the country. This includes taxable supplies, exempt supplies with a right to deduct and some exempt supplies without a right to deduct, unless they are just occasional ancillary activities.

In contrast,net turnover in accounting is an accounting concept from the accounting regulations. From 2024 onwards, for accounting purposes, net turnover means revenue from the sale of goods and services for an accounting period (with additional special features for specific entities). This is a completely different figure and resultant number than turnover for VAT and often leads to confusion when the two figures are confused.

Compulsory VAT registration: when you become a taxpayer

Newly (from 1 January 2025), turnover for compulsory VAT registration is calculated per calendar year (January-December). Two new thresholds have also been introduced:

1. cZK 2,000,000 per calendar year: once you exceed this turnover in a given year, you become a taxable person from 1 January of the following year, unless you notify the tax authorities in time that you want to become a taxable person earlier. You must apply within 10 working days from the date you exceeded the limit.
2. cZK 2,536,500 per calendar year: if you exceed this higher limit in the same year, you become a taxpayer on the day after you exceed it and the 10 working day application deadline applies again.

The first limit therefore “transfers” you to payer status on 1 January of the following year, the second limit triggers payer status almost immediately.

Not sure exactly when you are required to register or how to properly file? In practice, we often deal with situations where a business exceeds the limit and responds late – which can lead to penalties. Contact us to check your specific case.

What exactly belongs to the turnover for VAT and what does not

The VAT turnover is the sum of all payments, excluding tax, due to the taxable person for supplies made with the place of supply in the Czech Republic. This includes:

• Taxable supplies (i.e. what is subject to VAT and not exempt)
• Exempt supplies with a right to deduct – typically the supply and acquisition of goods within the EU, the import and export of goods including directly related transport and services, the supply of services to a third country or the transport of persons.
• Exempt supplies without deductibility where the supply is not an occasional ancillary activity but part of a normal economic activity (assessed, for example, by the ratio of ancillary to main income) – in particular financial, pension and insurance activities, supply of immovable property and rental of immovable property.

The law also lists what is not included in turnover for VAT purposes:

• Certain exempt supplies without the right to deduct – typically education and training, health services and the supply of medical goods, social assistance or gambling.
• Payment for the supply or provision of fixed assets, unless such sales are an integral part of the normal business (e.g. a one-off sale of company machinery by a company that does not normally sell machinery).
• Charges with place of performance outside the country.
• Advances received – these are included in turnover only on the date of the transaction.

Consideration means a sum of money or the value of non-monetary consideration given in direct connection with the performance. This includes price subsidies (e.g. a grant that reduces the price of admission for a customer) but not profit and loss subsidies or subsidies for the acquisition of fixed assets.

Typically, all it takes is one miscounted item (e.g. a service abroad or the sale of an asset) to give you a completely different figure. If you want to make sure you’re calculating turnover correctly, we’ d be happy to walk you through it step by step.

Practical experience: how to calculate VAT turnover from your data

The following procedure works well in practice. First, filter all transactions made in the Czech Republic for the current calendar year from your accounting or tax records, always in amounts excluding VAT and by the date of the transaction. Then exclude sales of fixed assets, one-off additional activities and transactions with place of performance outside the Czech Republic.

Compare the result with the limits of CZK 2 000 000 and CZK 2 536 500. If you are around the thresholds, keep track of your turnover at least monthly and if you are in danger of exceeding the higher limit, prepare to register immediately.

Model example with numbers: artisanal non-payer in 2026

Imagine a carpenter who invoices without VAT in the Czech Republic in 2026 (he is a non-taxpayer) and in January-September he reaches successively 1.85 million CZK. In October he issues orders for CZK 230,000 and in November another CZK 500,000 (all in the Czech Republic, excluding VAT).

In October , it will exceed CZK 2,000,000, so it must apply for registration within 10 working days. If he does not indicate that he wants to become a taxpayer before then, he will become a taxpayer from 1 January 2027.

However, in November he will already exceed CZK 2,536,500 and thus legally becomes a taxpayer from the day after the overrun – i.e. in November. And again, he has 10 working days to apply for VAT registration.

So he has exceeded both thresholds in one year, triggering the earlier emergence of taxability.

Checklist: how to quickly check your turnover for VAT:

• Add up all transactions in the Czech Republic for the calendar year.
• Count the amounts excluding VAT.
• Exclude sales of fixed assets (unless they are ordinary activities).
• Do not include transactions outside the Czech Republic.
• Keep track of turnover on an ongoing basis (ideally monthly).
• Compare the result with the limits of CZK 2 000 000 and CZK 2 536 500.

Common mistakes: when there is something over or missing in the turnover

In practice, we often encounter the idea that if money has not arrived in the account, it does not count towards VAT turnover. This is not true – it is the transaction that counts, not the collection.

The second common mistake in practice is to include the sale of fixed assets (for example, company vans) even though they are not usually included in turnover, unless car sales are your typical business.

A third mistake is the imputation of services with a place of performance outside the Czech Republic (typically the provision of services to a company from the EU where the place of performance is the customer’s country). This is not included in domestic turnover.

In our experience, the most common problem occurs when the entrepreneur gets “just under the limit” and stops tracking turnover. They then discover the overrun late, which can mean a VAT chargeback and penalties.

Where to check if someone is VAT registered and where to find out the turnover of the company

You can check if you are VAT registered on the VAT register on the My Taxes portal. Here you can find out whether the entity is a VAT payer, an identified person or an unreliable payer and what accounts it has reported to the tax authorities. However, you cannot read the turnover from the register – the register of taxpayers is only used to verify the VAT status.

To find out the annual turnover of the company (sales), you need to consult the financial statements published in the Collection of Deeds of the Public Register at Justice.cz. Business corporations are required to publish financial statements, but micro and small unaudited entities are not required to publish a profit and loss statement, so in some cases you won’t see sales.

The ARES (Administrative Register of Economic Entities) is then an official search engine that aggregates data on entities from multiple state registers (including the public register), but again, it doesn’t show turnover – but it’s great for quickly checking basic identification data, VAT numbers and linking to extracts from registers.

When it pays to deal with VAT with a solicitor

Not every VAT situation is complicated, but in some cases a mistake can be significantly more costly. We typically recommend dealing with a professional if:

• you are approaching the threshold for compulsory registration and are unsure of the calculation,
• you are providing services abroad and are dealing with the place of supply,
• you are selling company assets and do not know whether they enter into turnover,
• the tax office wants you to complete or has started an audit,
• you need to register quickly and without risk of errors.

Are you approaching the 2 million limit or have you already exceeded it? Don’t wait for the tax office to ask you. We can help you avoid unnecessary mistakes.

Summary

The turnover for VAT is the sum of payments excluding VAT for supplies with a place of supply in the Czech Republic (taxable supplies, exempt supplies with a claim and some without a claim). As of 1 January 2025, turnover is assessed on a calendar year basis and two limits apply: if you exceed CZK 2,000,000, you become a taxpayer as of 1 January of the following year (the application must be submitted within 10 working days), and if you exceed CZK 2,536,500, you become a taxpayer on the day after exceeding it (again with a 10-day deadline).

The turnover includes the price subsidy. This does not include selected exempt transactions without entitlement (e.g. education, health and social services, gambling), one-off sales of fixed assets outside the ordinary course of business, transactions with a place of business outside the Czech Republic and advances received until the time of the transaction.

You can verify your taxpayer status in the VAT register on the My Taxes portal, annual sales (if published) in the collection of documents on the Justice.cz portal and basic identification in ARES.