VAT Changes 2025: What You Need to Know

The VAT Act amendment effective from January 1, 2025 brought some of the most extensive changes in recent years. It affects turnover calculation, VAT payer registration, deduction deadlines, and small businesses trading within the EU.

Turnover for VAT purposes is now tracked per calendar year, not over 12 consecutive months. A two-tier registration system also applies: - When turnover exceeds CZK 2,000,000, the company becomes a VAT payer from January 1 of the following year (unless it opts to become a payer earlier) - When turnover exceeds CZK 2,536,500, the company becomes a VAT payer immediately, from the following day

The deadline for claiming VAT deduction is shortened. The deduction can now be claimed no later than the end of the second calendar year following the year in which the entitlement arose.

Corrections of the tax base (typically for returned goods, additional discounts or bonuses) can now be made within 7 years.

From 2025, Czech small businesses can use the European small business scheme (SME regime) to benefit from VAT exemption in other EU member states, provided their EU-wide turnover does not exceed EUR 100,000. This simplifies cross-border business, especially for e-shops and service providers.

1. Monitor how your turnover develops within the calendar year 2. Update your accounting software and VAT records settings 3. Review processes to claim deductions on time 4. If you do business in the EU, check the SME regime options 5. Consult specific situations with a tax advisor

Violations of control report obligations continue to carry fines of up to CZK 500,000. Legal basis: amendment to Act No. 235/2004 Coll., on Value Added Tax, effective from January 1, 2025. Details on individual changes are published by the Financial Administration of the Czech Republic.