Shrnutí: VAT, or value-added tax, is an indirect tax that is paid by the consumer as part of the final price of goods or services, but is remitted to the government by the VAT payer. In the Czech Republic in 2026, the standard rate is 21% and the reduced rate is 12%. In this article, we’ll explain how VAT works, who it applies to, and how VAT is calculated in the Czech Republic—both on the pre-tax price and on the final price.
Quick Overview
Are you wondering whether you need to register for VAT, how to properly tax a specific transaction, or dealing with a dispute with the tax authority? Our attorneys will help you assess your specific tax situation and recommend the correct course of action.
VAT is an indirect tax, which means that it is paid to the state by an entity (the taxpayer) other than the one who actually bears its economic burden—which is ultimately the consumer, who pays it as part of the price of a product or service. The essence of VAT is the taxation of added value—that is, the difference between what a business purchases (inputs) and what it sells (outputs).
The most fundamental regulation is the Value-Added Tax Act (VAT Act), which defines who is liable to pay the tax, how the tax is calculated, the applicable rates, and the deadlines for filing returns. In practice, however, you will also encounter implementing regulations and methodological guidelines from the Financial Administration that clarify new procedures or changes at the European level.
We’ll help you navigate the law—whether you’re dealing with a specific tax situation, preparing for a tax audit, or defending yourself in court.
VAT Taxpayers
Correct classification under the various tax entities determines when the obligation to file a tax return arises, when a tax credit can be claimed, and what administrative requirements must be met. We distinguish between four basic categories: a taxable person, a group, a VAT payer, and an identified person.
Taxable Person
A taxable person is anyone who independently carries out economic activities. This includes manufacturers, merchants, service providers, farmers, and members of the liberal professions. Nonprofit organizations also fall into this category if, in addition to their primary activities, they engage in economic activities for the purpose of generating regular income (such as renting real estate). Employment is not considered an economic activity, and therefore wages or salaries do not meet the definition of a taxable supply for VAT purposes.
Group
A group consists of entities linked by capital or otherwise, with their registered office or place of business in the Czech Republic, which register jointly and act as a single VAT payer. The group has a single tax identification number (TIN), and a selected member represents it before the tax authority. Transactions within the group are not subject to VAT— the tax liability arises only in relation to third parties.
VAT Payer
A taxable person may become a VAT payer by law or voluntarily. Starting in 2025, mandatory registration will be based on annual turnover. If turnover exceeds 2,000,000 CZK, VAT payer status generally takes effect on January 1 of the following year; if the threshold of 2,536,500 CZK is exceeded, the person becomes a VAT payer the very next day. The VAT Act also governs other cases in which VAT liability arises. Voluntary registration is possible even without reaching the specified turnover thresholds, provided that the statutory conditions are met.
When is it worth registering as a VAT payer? You’ll find the answer in our article.
An identified person is an entity that is not a taxpayer but carries out a specific cross-border transaction, in particular an intra-Community acquisition of services or goods. An identified person does not pay tax on domestic transactions, but files a tax return and pays VAT on transactions for which a tax liability arises in the Czech Republic.
The scope of the tax defines the transactions to which VAT applies. Under Czech law, it includes four main categories:
Any supply of goods or provision of services that takes place within the territory of the Czech Republic as part of business activities is considered subject to tax.
A taxable event occurs when a VAT payer, another taxable person, or a non-taxable legal entity acquires goods from a supplier registered for VAT in another EU Member State. The place of destination is decisive: if the goods are destined for the Czech Republic, the tax is paid here.
For non-payers, an annual limit of 326,000 CZK applies—benefits below this threshold are excluded from coverage.
A special regime applies to the purchase of new vehicles —cars, boats, airplanes, etc. Regardless of the buyer’s status, VAT must be paid in the country of registration, i.e., the Czech Republic.
When importing goods from non-European countries, VAT is collected during customs clearance. The place of supply is the Czech Republic, and therefore the tax is paid in the Czech Republic at the same time as customs duties. If the importer is a VAT payer, they may claim the VAT as a deduction directly on their tax return.
How do customs duties and VAT work when buying from China? You can read about it in our article.
The tax base is the consideration that the taxpayer is to receive for a taxable supply, excluding the tax itself. For ordinary domestic transactions, this is therefore the sales price excluding VAT. For imports from countries outside the EU, the tax base is determined by the customs assessment base, to which other charges, such as excise tax, are added.
For transactions between related parties, the tax authority may determine the tax base based on the arm’s-length price if the agreed-upon amount does not reflect market conditions, in order to prevent tax evasion.
The principle of VAT is best illustrated by a simple chain: manufacturer → wholesaler → retailer → end customer. Each link in the chain adds its own margin to the price and also adds VAT to it. While the customer pays the full tax, individual businesses pay the government only the difference between output VAT (which they invoiced) and input VAT (which they paid to suppliers).
If output tax exceeds input tax, a tax liability arises—you must remit the difference to the tax office. Conversely, if input tax is higher, an excess deduction arises and the government will refund the difference to you. This ensures that, at every stage, only the newly added value is taxed, not the entire price of the product each time it changes hands.
Imagine that a wholesaler purchases goods for 2,200 CZK + 300 CZK VAT (21%). When selling to a retailer, the wholesaler sets the price at 3,000 CZK + 360 CZK VAT. The wholesaler offsets the output VAT (360 CZK) against the input VAT (300 CZK) and remits the difference of 60 CZK to the government. The retailer then sells the goods to the consumer, calculates the difference between its input and output VAT once again, and the entire process is completed when the consumer pays the tax out of their own pocket.
As of January 1, 2024, the consolidation package introduced the most significant change in the past ten years: the second reduced rate of 10% and the first reduced rate of 15% were merged into a single reduced rate of 12%, while the standard rate of 21% remained in place. This simplified the system, but it also resulted in the reclassification of certain items between tax rates.
Currently, there are two VAT rates in effect:
To determine the final price including tax, multiply the tax base by the applicable rate and add the two amounts together. Example: a laptop priced at 25,000 CZK excluding VAT at the standard rate of 21%:
VAT = 25,000 × 0.21 = 5,250 CZK
Price including VAT = 25,000 + 5,250 = 30,250 CZK
Conversely, if you want to determine the tax and the tax base from the final price:
Tax base (21%) = price / 1.21
VAT = price – tax base
For example, 30,250 CZK / 1.21 = 25,000 CZK; VAT = 5,250 CZK.
VAT is typically reported and paid monthly or quarterly, depending on the size of the business’s turnover and the taxpayer’s status. You must then file your tax return and control report electronically no later than the 25th day after the end of the tax period, and the tax must be credited to the tax authority’s account by the same date. If the 25th falls on a weekend or a holiday, the deadline is extended to the next business day.
Identified persons have a monthly tax period and file returns for each month in which they are required to report tax.
As of January 1, 2025, two thresholds apply:
Of course, you can also register voluntarily before exceeding the limits, for example, to be able to deduct input VAT on significant investments or when conducting business with foreign countries.
From our experience: A common issue with VAT registration is late detection of exceeding the turnover threshold or incorrect identification of which transactions count toward turnover. Furthermore, following the rule changes in 2025, it is necessary to monitor not only the 2 million CZK threshold but also the higher limit of 2,536,500 CZK. If a business owner addresses the situation too late, this can result not only in administrative complications but also in additional tax assessments and related penalties.
How do you register for and deregister from the VAT system? What are the applicable conditions and procedures, and what new developments have there been this year? You’ll find out in the next article.
Today, all tax returns are filed exclusively electronically via a data box, the EPO application, or accounting software. Another part of the administrative process is the control report, which provides a detailed record of domestic B2B transactions. Legal entities must file this report within 25 days of the end of each calendar month. Individuals may file control reports monthly or quarterly.
If you sell goods or certain services to customers in the EU online, you’ll appreciate the One-Stop Shop (OSS) system, which allows you to file a single quarterly return in the Czech Republic and eliminates the need to file separate returns in other member states. The OSS return must be filed by the end of the month following the end of the quarter.
In addition to the general method of taxation, the VAT Act also introduces several special regimes that govern how tax is calculated and reported for specific activities or commodities. The aim is to take into account the nature of the transactions in question and to simplify administrative procedures where standard practices would not reflect economic reality.
The first of these is the regime for travel services. Taxpayers who organize a package tour comprising accommodation, transportation, and other tourism services tax only their markup, not the entire amount collected.
The second regime applies to dealers in used goods, works of art, collectibles, and antiques. Here, too, the difference between the purchase price and the selling price is taxed to prevent double taxation of the same item.
The third specific procedure is the regime for investment gold, which sets forth the conditions under which gold is exempt from tax and the rules for tax deductions for producers and intermediaries.
We’ll help you navigate the law—whether you’re dealing with a specific tax situation, preparing for a tax audit, or defending yourself in court.
Special regimes also include the single administrative point system, known internationally as the One-Stop Shop. It allows businesses that sell goods or services to customers in other EU member states to handle all cross-border VAT obligations through a single electronic interface. This eliminates the need to register for taxes in each individual country where the customer is located.
Reverse charge is a separate issue, in which the role of the taxpayer changes: the customer, not the supplier, declares and pays the tax. This mechanism serves to prevent tax evasion involving high-risk goods and services.
Under national law, it is consistently applied to the supply of gold, to selected goods listed in the law (such as certain types of metal scrap), in specific transfers of real property, for construction and installation work, and for the supply of goods provided as collateral or subject to a retention of title.
In addition to these permanent situations, the government may, by decree, temporarily extend the reverse charge mechanism to other transactions if required by the economic situation or the emergence of fraudulent practices.
How do you file electronically through the Moje daně portal? The next article will tell you.
Violations of the obligations set forth in the VAT Act and the General Tax Code result in financial penalties and other negative consequences for taxpayers.
Each control report must be filed by the twenty-fifth day following the end of the relevant tax period and in the prescribed electronic form. If a taxpayer files the report late, the law automatically imposes a fine of 1,000 CZK. If the taxpayer files the report only after receiving a request to do so within an extended deadline, they will be fined 10,000 CZK.
More serious consequences arise if the tax authority requests that the return be supplemented or corrected and the taxpayer fails to respond within the specified time limit: Failure to comply with the request may result in a fine of up to 50,000 Kč, or 30,000 Kč if the taxpayer supplements the return but only after the extended deadline has passed.
In the event of repeated problems or a clearly negligent approach, the penalty amount increases, and the tax administrator may impose a fine of up to 500,000 CZK if the taxpayer fails to file the return even after repeated requests.
Serious or systematic violations of obligations (particularly ignoring requests for control reports or significant VAT arrears) result in inclusion in the registry of unreliable taxpayers.
This status is publicly available and has direct implications for business partners. They are liable for the VAT on transactions with an unreliable taxpayer and often cease to do business with them for this reason. Removal from the registry requires the correction of all deficiencies and the passage of at least one year without further violations.
What are the obligations of VAT payers and non-VAT payers? The next article will answer that question.
The tax authority typically grants so-called grace periods during which errors can be corrected without incurring the highest penalties (usually 5 days); however, interest on late payment accrues starting on the fourth dayafter the tax is due. In addition to financial penalties, excessive tax credits may be blocked, tax audits may be extended, or criminal charges may be filed in serious cases of tax evasion.
A responsible approach to document record-keeping, timely electronic filings, and ongoing communication with the tax authority thus represent the most effective prevention against penalties and the reputational risk associated with the status of an unreliable taxpayer.
All the rules we have described are based on the VAT Act. This legislation defines basic terms, sets forth the procedure for calculating tax, exemptions, rates, and penalties for late payment. For general guidance, we also recommend following the methodological information issued by the Financial Administration, which responds to European legislation and the case law of the Court of Justice of the European Union.
VAT is an indirect tax that is effectively paid by the end consumer as part of the price of goods and services, while taxpayers collect it and remit it to the state. In the Czech Republic in 2026, the standard rate is 21% and the reduced rate is 12%. To calculate VAT from the pre-tax price, multiply the tax base by the applicable rate; to derive the tax base from the price including VAT—for example, at the 21% rate—divide the amount by 1.21. Businesses must also follow the rules for VAT registration—starting in 2025, turnover is assessed on a calendar-year basis, with the key thresholds being CZK 2,000,000 and CZK 2,536,500. Taxpayers then handle VAT returns, deductions, control reports, and, in some cases, special regimes or the reverse charge mechanism.
VAT is a tax included in the price of most goods and services. Economically, it is borne by the end consumer, while the VAT payer collects it and remits it to the government.
To calculate the tax, multiply the price (excluding VAT) by the applicable rate. For example, for a price of 1,000 Kč and a rate of 21%, the VAT is 210 Kč, and the price including VAT is 1,210 Kč.
For a 21% tax rate, divide the final price by 1.21. The result is the price excluding VAT; the difference between that amount and the final price is the VAT itself. For a 12% tax rate, divide by 1.12.
It compares it with independent comparable transactions (the CUP method). In practice, if the difference exceeds 10%, the tax authority may assess additional VAT based on the arm’s-length price and impose penalties.
The basis is the usual price for each transaction. Both parties issue an invoice with the corresponding amount and VAT, even though no cash changes hands.
For example, flavored bottled water (21 %), fitness center services (21 %), or dog food processing (21 %). You can correct the error by filing an amended return and paying the additional tax.
Save evidence (a screenshot, log), and submit your return as soon as the portal is up and running again. The tax office usually accepts late filings without penalties if you can prove the outage.
You must file the follow-up tax return within 5 business days. If you file it on time without being asked to do so, you will not be subject to a fine of 10,000 Kč, but you may still be subject to a fine of 1,000 Kč for late filing.
If you make payments to a company designated by the Tax Office as an unreliable payer, you are liable for its unpaid VAT. Verify the VAT ID in the registry and make payments to the accounts published by the Tax Office.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 15 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 15 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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