Effective January 1, 2025, the Czech Republic will introduce significant changes to its Value Added Tax (VAT) regime to simplify processes and adjust thresholds. Key changes include a new annual turnover period for VAT calculation, expansion of the reverse charge mechanism to include cleaning services, and removing the five-year real estate exemption. Additionally, the time limits for VAT deductions and corrections will be revised, and the CZK 2,000,000 car deduction limit may be altered in 2027. Businesses must prepare for these updates to ensure compliance and optimize VAT processes.
Czech Republic: VAT changes coming in 2025
Public
Other countries
Author: Stefan Ditrih
Category:
General information
Views:
1912
Content accuracy validation date:
16.10.2024
Content accuracy validation time:
14:55h
From January 1, 2025, the Czech Republic will implement several significant changes to its Value Added Tax (VAT) regime. These updates aim to streamline VAT processes, expand the scope of certain mechanisms, and adjust various thresholds and limits. Here’s a detailed look at the upcoming changes:
VAT Turnover Period Calculation
The VAT turnover period will now be calculated annually from January 1 to December 31. Entities with a turnover between CZK 2,000,000 and CZK 2,536,500 will become VAT payers the following year. Those exceeding a turnover of CZK 2,536,500 will be liable for VAT two days after surpassing this threshold.
Expansion of the Reverse Charge Mechanism
The reverse charge mechanism, which shifts the tax liability from the supplier to the customer, will be expanded to include certain cleaning services.
Simplification of Real Estate Rules
The five-year exemption limit for real estate will be abolished. The substantial change threshold will also be reduced from 50% to 30% of the property’s value.
VAT Deductions and Corrections
Several changes will be made to VAT deductions and corrections:
- The time limit for claiming VAT deductions will be reduced from three years to two years.
- The time limit for correcting the tax base will be extended from three years to seven years, regardless of legal proceedings.
- A new requirement will be introduced to refund tax deductions on liabilities outstanding for more than six months.
Car Deduction Limit Review
The CZK 2,000,000 car deduction limit may be revised or removed in 2027.
Overview of Czech VAT Rules
The Czech Republic’s VAT system aligns with EU regulations and consists of a standard VAT rate and two reduced rates. Here are the key points:
VAT Rates
- Standard rate: 21%, applicable to most goods and services.
- Reduced Rates: 15% and 10%. The 15% rate applies to items such as foodstuffs, certain health products, and social housing, while the 10% rate applies to books, pharmaceuticals, and infant food.
VAT Registration
Businesses must register for VAT if their taxable turnover exceeds CZK 2,000,000 (approximately €80,000) within 12 consecutive months. Voluntary registration is available for businesses with turnover below this threshold. Foreign businesses without a fixed establishment in the Czech Republic but providing taxable supplies must also register for VAT.
VAT Returns
VAT returns are typically filed monthly or quarterly, depending on the turnover. These returns must be submitted electronically by the 25th day of the month following the tax period. Intrastat declarations are required for businesses involved in intra-EU trade exceeding a specified threshold.
Chargeable Transactions
VAT on most transactions is chargeable at the point of supply, meaning when goods or services are delivered. The reverse charge mechanism applies to certain cross-border and domestic transactions, shifting the tax liability from the supplier to the customer.
Other news from Other countries
Malaysia Adopts PINT-MY Billing for E-Invoicing
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
The PINT-MY Billing Specification is Malaysia’s version of the Peppol e-invoice, adapted for SST and based on the UBL 2.1 XML format. It sets guidelines for B2B and B2G invoicing via the MyInvois platform, supporting automation and tax compliance. It includes defined business roles, main invoice fields, and tax tagging for SST (Sales and Service Tax), TTx (Tourism Tax), LVG (Low-Value Goods), and... Read more
Latvia: B2B E-Invoicing Mandate: New Timelines Approved
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The Latvian Parliament adopted a revised draft law, No. 967/Lp14, setting new deadlines for mandatory e-invoice data reporting, domestic B2B transactions, and voluntary e-invoicing for small businesses. On June 5, 2025, the Budget and Finance (Tax) Committee rejected a proposal (Amendments to the Accounting Law No. 927/Lp14) to delay the B2B e-invoice mandate to January 1, 2027. Instead, a revised... Read more
The Philippines Implement VAT on Foreign Digital Services
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
The Philippine BIR has issued Circular No. 47-2025, detailing VAT rules for foreign digital service providers starting 1 June 2025. Registration is required only if annual sales exceed PHP 3 million, and no local tax representative is needed. The simplified process supports fair competition and reduces compliance burdens, aligning with international digital tax practices. The Philippine Bureau of... Read more
Singapore Starts Phased Rollout of Mandatory E-Invoicing
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Singapore’s Peppol-based e-invoicing system, launched in May 2025, becomes mandatory for new GST registrants from November 2025 and fully enforced by April 2026. Businesses are urged to adopt early via InvoiceNow, IMDA’s national platform. E-invoicing providers help ensure IRAS compliance, secure document handling, and cross-border readiness. Important Components: InvoiceNow: The national e-inv... Read more
UAE to Ban Single-Use Plastics by 2026
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The UAE will ban single-use plastic products from January 1, 2026, as part of a phased strategy to combat plastic pollution. The ban builds on the 2024 ban, aiming for a future free of waste and pollution. The UAE is focusing on efficient resource use, sustainable food practices, and reducing plastic waste. Starting January 1, 2026, the UAE will prohibit the import, production, and trade of single... Read more
Chile Mandates Printed or Digital E-Tickets for All B2C Sales
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The authority has issued exempt resolution No. 53, requiring taxpayers to deliver printed or virtual representations of e-tickets or vouchers for B2C transactions, including cash, bank transfers, debit, credit, and prepaid cards, effective May 1, 2025. The authority has released exempt resolution No. 53, which mandates the delivery of either a printed or digital copy of the e-ticket (which s... Read more
Estonia's VAT Hike: 24% Standard Rate Begins July 2025
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Estonia's standard VAT rate will rise from 22% to 24% from 1 July 2025, with reduced rates from 9% to 13% and 5% to 9%. Starting July 1st, 2025, Estonia is raising its standard VAT rate from 22% up to 24%. The lower VAT rates are going up too, moving from 9% to 13% and from 5% to 9%. So, what do you need to do? When selling to customers in Estonia and charging them VAT, it’s a must to use... Read more