General Information on VAT & Business Abroad

When to Charge and Pay VAT

This table is far from complete - there are differences between selling services and goods abroad.

When selling goods abroad, in case a business stays under the VAT-thresholds in other EU countries, it only will need the CZ VAT number. It used to work like this: once the annual threshold is crossed in an EU country, then in that EU country a local VAT number needs to be registered. This rule has changed since 1.7.2021.

Important is that on 1.7.2021 a new European-wide VAT system was implemented. This so-called MOSS / OSS system allows to file VAT Returns for several countries in with 1 VAT Return in 1 country (most likely the country where the seller is - unless the seller is based outside EU), without the need to be registered in other EU countries (spoiler: but if a business already has a VAT number in another EU-country it should continue to file in that country in the same way as before 1.7.2021). Catch is that the seller will need to charge the *local* VAT percentage of the country where the buyer is.

Selling services (as most of our clients do) is (a bit) easier, see the table below.

I SELL
Services
CZ client
(private or business)
without VAT number
CZ client
(private or business)
with VAT number
EU client
(private or business)
without VAT number
EU client
(business)
with VAT number
non-EU client
without VAT number
I have no
VAT Reg.
I do not charge VAT I do not charge VAT possible to sell to. Note 1 You should have VAT-light. Note 2 possible to sell to,
VAT registration not required. Note 3
I have
VAT-Light
I can not charge VAT. Note 4 I can not charge VAT. Note 4 depends on situation,
it may be no, 0 or 21%
I charge 0% VAT
(Reverse Charges)
I do not charge VAT
(VAT no applicable)
I have
Full VAT
I charge 21% VAT I charge 21% VAT I charge 21% VAT I charge 0% VAT
(Reverse Charges)
I do not charge VAT
(VAT not applicable)

I BUY
Services or
Goods
Claiming
VAT on CZ expenses
Claiming
VAT on EU expenses
CZ supplier
no VAT number
CZ supplier
with VAT number
EU supplier
no VAT number. Note 1
EU supplier
with VAT number. Note 2
non-EU supplier
no VAT number. Note 5
I have no
VAT Reg.
No No I do not pay VAT I pay 21% VAT,
NO claim back
I do not pay foreign VAT I pay foreign VAT,
NO claim back
Goods: CLO and 21% CZ VAT
NO claim back
I have
VAT-Light
No. Note 4 No. Note 4 I do not pay VAT I pay 21% VAT,
NO claim back
I pay CZ VAT,
NO claim back (Goods)
I pay Foreign or CZ VAT (Reverse Charge), NO claim back (Goods). Note 2, 6 Goods: CLO and 21% CZ VAT
NO claim back
I have
Full VAT
Yes Limited I do not pay VAT I pay 21% VAT,
CAN
claim back
I do not pay foreign VAT I do not pay foreign VAT
(Reverse Charge)
Goods: CLO and 21% CZ VAT
CAN claim back

Note 1: Is is possible to sell to private individuals, as they are treated as CZ individuals, and Revenue it will be counted towards CZ Revenue (and: CZ Revenue over 1M CZK / 12 months will result in an obligatory Full VAT registration)
Careful with selling to EU businesses without VAT number. They could have the obligation to register for VAT, in the same way you have if you sell in the EU / abroad. An exception to this are universities, government bodies and business under the local VAT-threshold. No VAT is charged, but at the same time it is necessary to provide information as to why the client is not VAT-registered. Filing this type of transaction is done on a special box on the VAT Return.

Note 1B: Selling goods / providing services in another EU country (by physically being there or being over the registration threshhold) will require a local VAT registration, and local VAT Reporting. Examples: a CZ-based business selling T-shirts at a concert in Poland, or organising a seminar in Germany, selling tickets at the door, having a (real) consultancy office abroad.

Note 2: Reversed charges (charging 0% VAT) applies for all VAT-registered businesses based in EU. A reversed charges transaction means that the client has the obligation to pay the VAT applicable in *his* country, not the VAT applicable in CZ. This *also* means that if a VAT-Light registered Czech business buys in the EU, and the seller does not charge the foreign VAT, the transaction thus becoming reverse-charge, the Czech VAT-Light business must pay the VAT in his own country = 21% Czech VAT.

Note 3: If you sell to private individuals or businesses outside the EU, generally speaking there is no VAT involved, not even 0%.

Note 4: The VAT-light number does not exist inside CZ, so you are still selling as a VAT-less entity in CZ, unless you would hit >1 M CZK from CZ sources in 12 months - then you would have the obligation to register for Full VAT. With VAT-light, since the number does not exists inside CZ, you can not claim back VAT on CZ expenses.

Note 5: Goods imported from outside the EU are subject to CLO (import tax) and 21% Czech VAT (these are collected by the Czech customs office). Services from outside EU are excempt of CLO and VAT.

Note 6: If, as a buyer, I do not provide my VAT-light number, probably the seller will sell with the local VAT. If I DO provide my VAT-light number, there are 2 scenarios: A: the seller may sell without local VAT (so it becomes a reversed-charges transaction), but then I should put that transaction in my CZ VAT Return, but *without* possibility to claim the 21% VAT (in other words: I end up paying 21% VAT) or B: the seller will charge the Czech 21% in case he is selling a good , not a service. Again, with VAT-light, I am not able to claim that 21% VAT back from the CZ Tax Office (because the VAT-light number does not exists inside CZ)



The table is, as said, far from complete - it is meant as an illustration for the simplest cases. Seek advice if that is not your case. Even we must study cases (especially with goods, or third-party selling involving more than 2 countries).

Unless you fully understand the VAT implications, do not start your business. Make a plan with an accountant before not afterwards.

Checking online a VAT number - for Czech and EU VAT numbers

Charging and paying VAT depends on who is VAT registered and where.

Czech clients can be checked in the ARES system, see
How to find ICO and other sro company / trade license (živnostenský list) data

VAT of foreign clients based in the EU can be checked here: VIES VAT number validation

Rules for Registration of VAT concerning business in EU

VAT registration is obligatory if you use or offer services to companies / persons in the EU.

VAT registration is obligatory if you import from an EU country cars, tabacco, alcohol, fuel (with excise duties) or goods exceeding a value of 326.000 CZK.

Which VAT can be claimed? Can foreign VAT be claimed?

Czech VAT on expenses made in Czech Republic can be claimed with a regular monthly / quarterly VAT Return provided that you are Full-VAT registered. With VAT-Light there is nothing to claim.

EU VAT can be claimed to a certain extent (depending on the country), but not in the regular CZ VAT Return. This VAT Return will have to be sent in an electronic format to the foreign tax office, not the Czech tax office. It is a fairly complicated business, and therefore, a number of years ago, the MOSS (Mini One Stop Shop) was invented - this made dealing with VAT in the EU possible through 1 form, but only for a limited set of services / goods. In 2021 the OSS (without the 'Mini') is to be launched, and the 1 form approach should make distance selling (Amazon, Ebay) easier since it will not longer be required to have local VAT numbers in each country.

As a general rule: when ordering something from abroad, provide your Full VAT number to the seller, so that he is able to issue an invoice without VAT (actually: reversed charges). In that case you do not need to claim the foreign VAT back, because you have not paid it in the first place!

EU Sales List (ESL) from 01.01.2010

Starting 01.01.2010, any VAT-registered SRO or trade license sending invoices to VAT-registered clients based in another EU country has the obligation to report electronically on monthly or quarterly basis to the tax office. These reports are no VAT reports, but must be filed in addition to VAT reports. See also