How to buy VAT-free in 2025: a guide for businesses and non-taxpayers

In this article, we show you when and how you can really save VAT, whether you are a corporation with a turnover of hundreds of millions, a sole trader following the registration threshold, or an ordinary family. We’ll add specific examples, explain the new EU and Czech regulations, and add tips on how to fill in the documents correctly so that the discount doesn’t disappear at the first check.

What is VAT and why you (don’t) pay it

Value added tax is an indirect tax levied by the state on almost every sale of goods or services. The standard rate of VAT is 21% from 1 January 2025; the only reduced rate is 12% and applies to selected items, such as certain foodstuffs or aids for disabled people.

The VAT payer pays the tax to the State and can also deduct input VAT (i.e. on the supplies received). A non-VAT payer, on the other hand, does not pay or deduct the tax because he does not claim it on his invoices.

When you can buy VAT-free as a taxpayer

If you are a taxable person, you can deduct input VAT on most purchases that are related to your economic activity. In practice, this means that the VAT-excluded price is the actual cost to you and the VAT amount is just an interim item that you then offset on your return.

Example: you buy a machine for CZK 121,000 (price including VAT). The tax base is CZK 100,000 (price excluding VAT), VAT is CZK 21,000. You deduct the CZK 21,000 on your return and your actual expenditure is CZK 100,000.

Reverse charge scheme

If you sell goods or services under the reverse charge, you do not include VAT on the invoice at all – only the amount net of tax and the note “reverse charge”. The tax is then declared and paid by your customer if he is a VAT payer

If, on the other hand, you are the customer, you will calculate the VAT on your tax return and claim it as a deduction immediately, so you will not be financially burdened by the transaction. This mechanism is only used for selected trades, typically in the construction industry or for the sale of metals and some electronics.

Intra-community acquisitions of goods and services

If you buy goods from another EU member state and you are a taxpayer, the supplier will usually issue you an invoice without VAT after verifying your VAT number. You declare the tax yourself in the Czech Republic and immediately claim it as a deduction. The result is again zero impact on cash flow.

When you can buy VAT-free as a non-taxpayer

You remain a non-taxpayer until your turnover per calendar year exceeds CZK 2,000,000. From 1 January 2025, however, you will not only follow the traditional annual turnover test, but also a special limit of CZK 2,536,500, after which you become a taxable person the very next day.

There is also a new cross-border regime for small businesses: a non-taxpayer can sell and buy in an EU member state and claim their own exemption without having to register for VAT abroad, provided the conditions are met.

How to purchase without VAT as a non-taxpayer or non-entrepreneur

Although VAT is usually borne by the final consumer, there are situations where you, as a “regular person” (i.e. a non-taxpayer), actually purchase goods or services on which you do not pay tax or where the tax does not appear on the receipt at all. When does this happen?

Duty free or buying when travelling outside the EU

When you fly from the Czech Republic to a third country (for example, for a holiday in Turkey), you can buy perfumes or electronics in a duty-free zone without VAT. The shop is allowed to sell the goods tax-free because the delivery takes place outside the EU tax territory. If you bring them back, customs regulations set personal import limits:

• €430 per person for air or sea transport,
• €300 for land travel,
• €200 for persons under 15 years of age.

If you exceed the limit, customs will charge you VAT and possibly customs duty.

Purchase from a non-VAT payer (bazaar, advertisement)

If you buy a car or furniture from a person who is not a business or VAT payer, you will not find any tax on the receipt – the sale of private property is not subject to VAT. Similarly, in brick-and-mortar bazaars or online marketplaces you will often find taxpayers using a special regime for second-hand goods: the seller only pays tax on the margin, so you won’t see VAT on the receipt.

Goods and services permanently exempt from VAT

Educational courses, healthcare, insurance, financial services or renting a flat are all supplies on which VAT is not charged at all, so the end consumer does not pay it.

Practical example

Imagine you buy a smartwatch for €350 in duty free during your holiday in Dubai. When you arrive in Prague, do you exceed the personal limit of EUR 430? No – you are under the limit, so you do not pay any VAT. If the watch cost €500, customs would charge 21% VAT and possibly duty on the difference of €70.

How to calculate the price without VAT

If you need to work out how to deduct VAT from the amount on your receipt, follow a simple equation:

1. Determine the rate. The rate is 21% for most goods and services and 12% for selected items.
2. Price without VAT = Price with VAT ÷ (1 + rate/100). Example.
3. VAT amount = Price with VAT – Price without VAT. In the example, it is CZK 210.

This is how you can quickly calculate the price without VAT for any purchase.

How to correctly issue an invoice without VAT

Non VAT payer

As a non-taxpayer you will indicate on the document:

• company name, VAT number, name of the supply;
• the price excluding VAT and the total amount, often the same, because VAT is not indicated;
• a statutory phrase such as “I am not a VAT payer”

Reverse charge

If you use reverse charge, you add, for example, the sentence “The tax is paid by the customer” and state the tax base excluding VAT. The recipient (payer) completes the calculation in the return.

Intra-community trade

In the case of an invoice to the EU with a valid VAT number of the counterparty, you add e.g.: “Exempt from tax according to § 64 of Act No. 235/2004 Coll.” You fill in the basis without VAT and attach a summary report.

The most common mistakes and how to avoid them

Many people still think that buying VAT-free guarantees zero administration, but the reality is different. In the reverse charge scheme, you must enter the correct transaction code in the control report or the tax office will quickly ask you to correct it.

In the case of intra-community acquisitions, it is the timely submission of a summary declaration, the correct classification of the transaction in the tax return and careful transport records that prove the actual movement of goods between countries that make the difference.

Non-payers of VAT should also remember that the law does not allow them any deduction. In each of these cases, keeping the required records consistently and archiving documents for the period of time required by the tax code protects your wallet and your reputation.

Summary

VAT in the Czech Republic will remain at the standard rate of 21% and a single reduced rate of 12% from 1 January 2025. Taxpayers can “buy VAT-free” primarily through input tax deductions, a reverse charge scheme for selected domestic transactions and intra-community acquisitions where an EU supplier invoices tax-free.

The entrepreneur remains a non-taxpayer up to a turnover of CZK 2,000,000, but from 2025 a limit of CZK 2,536,500 for immediate registration has been added. Non-entrepreneurs will encounter tax-free purchases, for example, in a duty-free zone when travelling outside the EU, when buying second-hand goods from a non-taxpayer or for permanently exempt supplies (healthcare, insurance, renting a flat, etc.).