The Czech Republic’s tax authority (GFD) shared details on VAT payer status and registration after a VAT law amendment went into effect on 1 January 2025.

Amendment set two annual turnover thresholds for mandatory VAT registration

The key change in the tax package is that taxable persons must track two turnover figures.

Until the end of 2024, a person became a VAT payer if their turnover in the Czech Republic exceeded CZK 2 million over 12 consecutive months. From 1 January 2025, they must also track turnover of CZK 2,536,500, with the period now based on a calendar year instead of 12 months.

There is also a change in the rules for when a taxable person becomes a VAT payer.

Previously, a person became a VAT payer on the first day of the second month after exceeding the CZK 2 million turnover threshold. A person becomes a VAT payer the day after exceeding the second turnover threshold of CZK 2,536,500 in domestic transactions.

The new rules eliminate the more extended interim period between exceeding the turnover threshold and officially becoming a VAT payer.

The changes also impact VAT payers, making VAT-exempt supplies without deduction rights.

Another key change in the new tax package is the requirement to repay VAT deductions if a liability remains unpaid six months after its due date. This provision will take effect for liabilities incurred on or after 1 January 2025.

Registration process

A person liable for VAT becomes a VAT payer the day after exceeding the second turnover but has 10 working days to register with the tax office.

Transitional process

The transitional provisions specify that the existing law will apply if the turnover threshold is exceeded before 31 December 2024. This requires businesses to submit registration applications within 15 days following the month the threshold was surpassed.