Proposed changes include expanded bad debt relief, lower VAT rates for non-alcoholic beverages, and partial implementation of EU digital VAT directives. 

RF Report

The Czech Ministry of Finance has unveiled two draft amendments to the VAT Act, introducing significant changes scheduled to take effect from 1 January 2027 and 1 July 2028, addressing bad debt provisions, hospitality VAT rates, and partial implementation of the EU VAT in the Digital Age directives.

Enhanced bad debt relief for small claims

The first amendment, published in February 2026, introduces substantial improvements to the bad debt correction regime for minor receivables. Under the new proposals, creditors will be able to reduce their tax base for unpaid debts when specific conditions are met: at least two written payment requests must be sent to the debtor, the individual receivable cannot exceed CZK 20,000 including VAT (doubled from the current CZK 10,000 threshold), and the debt must be at least three months overdue (reduced from the existing six-month requirement).

The annual limit per debtor will increase significantly from CZK 20,000 to CZK 100,000, including VAT per calendar year. This simplified regime will not apply if the receivable already qualifies under another correction provision. For debtors, the timeframe for adjusting tax deductions will be cut in half, from six months to just three months.

Reduced VAT rate for beverages

The amendment would also expand the reduced 12% VAT rate to cover all non-alcoholic beverages served as part of catering services, down from the standard 21% rate. These measures are expected to become effective from 1 January 2027, pending completion of the legislative process.

EU digital age compliance (ViDA)

A second amendment, submitted for public consultation in March 2026, addresses requirements under Council Directive (EU) 2025/516. Minor adjustments to the One Stop Shop mechanism will take effect from 1 January 2027, while provisions eliminating the EU call-off stock simplification would be implemented from 1 July 2028.

Notably, the current proposals do not cover major ViDA components, including platform economy rules, electronic invoicing requirements, and digital reporting obligations. Both amendments remain in early legislative stages.