The VAT Act in the Czech Republic is possibly one of the most dynamic laws in terms of its changes and amendments. And it is certainly a law whose changes are worth monitoring closely if you are engaged in business activities. ⠀
The Czech Parliament has approved new amendments to the VAT (DPH) Act, which came into effect in January 2023. The turnover threshold for mandatory VAT registration has been raised to 2 million CZK (previously, the threshold was 1 million CZK). ⠀
In addition to the main amendments, a so-called transitional period is in effect. Its purpose is to avoid forcing entrepreneurs into the VAT system who are not yet payers and do not reach the higher turnover amounts by the end of the year (unless they wish to do so voluntarily), as well as to allow payers who would not reach the higher turnover to exit the value-added tax system (cancel their registration). ⠀
The transitional period is as follows: a person who is not yet a VAT payer and whose turnover for the 12 consecutive calendar months immediately preceding December 2022 exceeded 1,000,000 CZK but did not exceed 2,000,000 CZK, will not become a payer from January 1, 2023, and is not required to apply for registration. In the case of a taxpayer who began their economic activity after this date, meaning they have been operating for less than 12 months, their turnover amount is calculated for that period. ⠀
The transitional provision also allows VAT payers to apply for cancellation of registration within 5 days from the date this transitional provision comes into effect, if their turnover for the 12 consecutive calendar months immediately preceding the effective date of this transitional provision exceeded 1,000,000 CZK but did not exceed 2,000,000 CZK.