If you are a business or freelancer operating in the Czech Republic, you may be required to register as a VAT Identified Person (light VAT). This registration applies even if you are not a full VAT payer but engage in certain transactions that require compliance with EU VAT rules. Below, we outline the key obligations and examples when light VAT registration is necessary.
Who Needs to Register as a VAT Identified Person?
You must register as a VAT Identified Person if you are for instance:
-
Receiving Services from an EU Business: If you purchase services from a company registered in another EU country (e.g., online advertising from Google or Meta, commissions from Airbnb or Booking, consulting services, or software subscriptions), you are required to register and report these transactions. Moreover, you are obliged to pay VAT from such services in the CR. As a VAT identified person you do not have a right to VAT deduction.
-
Providing Services to an EU Business: If you are providing services to a company registered in another EU country (e.g., IT consulting, marketing services, or freelance work), you must register and file VAT reports.
What Does VAT Identified Person Status Mean?
-
Unlike full VAT payers, VAT Identified Persons do not charge VAT on their Czech sales.
-
You must submit a VAT Summary Report (Souhrnné hlášení) or VAT return when engaging in the transactions mentioned above.
-
You apply reverse charge VAT on applicable transactions, meaning the VAT responsibility shifts to the customer or supplier in another EU country.
- You cannot claim the input VAT.
How to Register as a VAT Identified Person?
The registration process involves submitting an application to the Financial Office (Finanční úřad), along with supporting documents regarding your business activities. The processing time varies, but approval is usually granted within a few days, max. weeks.
Ongoing Obligations
Once registered, you must:
-
Submit a VAT Summary Report (Souhrnné hlášení) monthly when you have a relevant transaction to report that month.
-
File a VAT return when engaging in applicable transactions.
-
Keep accurate records of cross-border transactions.
Need Help with VAT Registration or the monthly reporting?
If you need assistance with VAT Identified Person registration, the monthly reporting or have questions about your tax obligations, feel free to contact us. Our expert team is here to help ensure compliance and avoid potential penalties.