On 11 December 2024, the Senate of the Czech Republic approved an amendment to the Value Added Tax (VAT) Act. Among other things, this revision introduces changes to the regime applicable to small businesses, such as the possibility of opting for exemption from paying VAT in other EU Member States.
As well as bringing it into line with EU law, the amendment includes a number of substantial technical changes, taking account of developments in case law and lessons learned from practice.
One of the main changes is the reduction in the period for which VAT can be deducted, from three to two years. Taxable persons will now be able to claim VAT deduction within two years of the end of the calendar year in which the right to deduct arose.
Another important point concerns VAT refund claims for businesses established outside the EU. The Ministry of Finance will publish a new list of eligible non-EU countries, based on the principle of reciprocity. In addition, applications for refunds will now be made in electronic format, which will simplify procedures and increase the efficiency of the process.
Once approved by the Senate, the bill was sent to the President of the Republic for signature. The majority of the new provisions are due to come into force on 1 January 2025, with certain specific measures only due to come into force on 1 July 2025, 1 January 2026 and 1 January 2028.
For more information, and any questions you may have about changes to VAT law in the Czech Republic, please contact our experts.
Source: Parliament of the Czech Republic
