Companies must reverse VAT deductions on unpaid invoices after six months, affecting cash flow and compliance. This rule applies to transactions from January 1, 2025, with exceptions for reverse charge supplies. Late payments allow VAT reclamation within two years. Accurate record-keeping is essential for partial payments and offsets, as they impact the adjustments.
New VAT Obligation: Unpaid Invoices Require Deduction Adjustment in Czechia
Public
Czech Republic
Author: Ema Stamenković
Category:
General information
Views:
61
Content accuracy validation date:
27.10.2025
Content accuracy validation time:
08:07h
Companies face a new VAT rule requiring them to reverse deductions on unpaid invoices, impacting cash flow for thousands and risking tax office issues if liability records are underestimated.
Main Rule: VAT payers must adjust (reverse) the deduction if payment isn't received within six months after the end of the invoice's due month.
- Example: Invoice with taxable date Jan. 31 and due date March 31 → deadline is 30. If unpaid, adjust in the September return (filed by Oct. 25).
Scope: Applies to transactions after Jan. 1, 2025; pre-2025 invoices unaffected. Covers all VAT payers claiming deductions on received taxable supplies (goods or services).
Exception: Excludes reverse charge supplies, where the recipient self-assesses tax (e.g., construction firms paying tax directly, without supplier-document deductions).
Late Payments: If paid after adjustment, reclaim the VAT portion in the tax period of payment, but within two years from the end of the calendar year when the initial adjustment was first due.
Pitfalls to Avoid: Accurately record partial payments, withholdings, or offsets, as they affect adjustments.
- Partial payments: Adjust only the unpaid portion.
- Offsets: Count as full payment equivalents.+
Other news from Czech Republic
Czechia: Modernizing VAT for Today’s Digital Economy
Public
Czech Republic
Author: Ema Stamenković
Czech Republic
Author: Ema Stamenković
The European Commission has approved modifications to modernize the VAT system, including mandatory electronic invoicing and digital reporting for cross-border transactions, VAT application in the platform economy, and VAT registration extension Aiming to lower administration and capture the risk of VAT fraud in the digital economy, changes have been approved at the EU level. A number of modifica... Read more
New document was uploaded: VAT Act No 235/2004
Czech Republic
Author: ------------------
The Czech VAT Act No. 235/2004 Coll. regulates the taxation of goods, services, intra-Community transactions, and imports, setting out who is liable for VAT and when it becomes chargeable. It establishes the standard and reduced VAT rates, along with exemptions for areas such as education, health care, financial services, international transport, and supplies for diplomatic missions or vessels. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Consumer Protection Act
Czech Republic
Author: --------------
The Czech Consumer Protection Act guarantees consumers clear rights regarding product information, pricing, labeling, advertising, and non-discrimination, while obligating sellers to provide accurate details, receipts on request, and proper warranty handling. It also regulates unfair commercial practices, sets minimum warranty periods, and ensures consumers can seek repairs, replacements, refunds, or price reductions when goods are defective. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Consumer Guide
Czech Republic
Author: ------------
Have you experienced a consumer problem which you don't know how to deal with? The following guide can help you find answers to the most frequent questions concerning consumer law. They can help you find your way through your rights and obligations as a consumer or a trader. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Consumer Guide
Czech Republic
Author: ------------
Have you experienced a consumer problem which you don't know how to deal with? The following guide can help you find answers to the most frequent questions concerning consumer law. They can help you find your way through your rights and obligations as a consumer or a trader. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login
New document was uploaded: Topic interpretation: Audits and Penalties in the Czech Republic
Czech Republic
Author: Ema Stamenković
This document aims to explain how a tax audit takes place and how to prepare for individual audit. procedures, and what rights and obligations a business entity has and what are the various penalties for non-compliance that are imposed for non-compliance in the Czech Republic. Read more
Subscribe to get access to the latest news, documents, webinars and educations.
Already subscriber? Login