Indirect tax ebook - Czech Republic

Registration

General rule for the registration states that a natural person (self-employed) or legal entity established in Czech Republic, and which has a taxable supply in Czech Republic, has a duty to monitor its turnover. When the turnover in CR is more than 1.000.000,- CZK (approx. 38.400,- EUR) in 12 consecutive months, an obligation to register is created.

The registration application has to be filed with the VAT office within 15 days after the end of the month, in which the taxpayer exceeded the turnover limit. The registration is valid on the first day of the third month following the month, in which the taxpayer exceeded the limit. Penalties arise for not registering with the tax office (see Penalties).

A company with the registered seat in CR can register for the VAT voluntarily (even the determined turnover limit for registration is not exceeded), but it must prove that the company activity is economic. This company becomes a taxpayer on the date stated on the registration certificate.

A foreign company with a permanent establishment in CR (place, where a permanent personnel and material equipment is being used for the economic activity) becomes a taxpayer on the day of the formation of this permanent establishment and is obliged to register within 15 days from the establishment. A foreign company that does not have a permanent establishment in CR has to register, if as a service provider or goods supplier has the place of supply in CR, which obliges it to file a tax return in CR.

VAT on e-services; one registration for all sales in EU
If a person from a third world country supplies electronic services to an ultimate customers in the EU, then it registers in one of the Member States. If the identification state is Czech Republic, then the supplier is due to inform the tax office in Brno I. about the start, end or any changes related to the special “VAT on e-services” program.

Distance sales
If a legal entity from another EU MS sells goods to individuals from Czech Republic, it has a duty to register, when the total value of these sales exceeds 1.140.000,- CZK (approx. 43.800,- EUR).

Group registration
A group of people, who have a registered office or permanent establishment in Czech Republic and are closely bound by financial and organizational links, can establish a Group in CR. Each person can be a member of only one group. Group becomes a taxpayer from the 1st January in the following year (if the registration application was filed before 31st October).

One member of the group negotiates in the name of the whole group. This member has to have a registered office in Czech Republic (if all members have a registered office in CR, then the acting member can be any of them). This acting member files the registration application.

All rights and duties of each member are transferred to the group on the day the group is registered.

• Introduction
• Scope
• Registration
• Tax rates
• Reporting & filing
• General tax application/Time of supply