The Czech Ministry of Finance is seeking authorisation to increase the turnover threshold for VAT. Currently, businesses with a turnover of CZK 1 million or more must register for VAT. The amount is in line with the EU’s common system of VAT, which sets a maximum threshold of €35,000. (Or an equivalent amount in the applicable currency.)
How EU rules affect Czech VAT policy
New EU regulations raise the maximum threshold to €85,000. The new threshold would thus allow the Czech government to set a CZK 2 million threshold. However, the new rules only apply from 1 January 2025.
The Czech Ministry of Finance has therefore sought authorisation to apply to the EU to increase the VAT limit at an earlier date.
Simplifying VAT for small businesses
In a statement, Finance Minister Alena Schillerová said that the move would reduce the administrative burden and simplify business.
According to the Ministry, increasing the VAT threshold will consequently lead to an estimated 105 000 fewer applicable taxpayers.
Czech VAT compliance for nonresident businesses
If a company not established in the Czech Republic provides taxable supplies to Czech customers, you may have to obtain a non-resident VAT registration.
Note that there are a number of activities that could trigger a registration obligation. These include e-commerce activities such as distance selling above the specified threshold.
See this Czech Republic compliance guide for a more detailed list of when you’re obliged to register for nonresident VAT. Or contact a Vatglobal expert for guidance on your specific VAT obligations.
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