On 1 January 2025, an amendment to the VAT Act comes into force, which brings a number of significant changes. Let’s introduce the most important ones in more detail.
The obligation to register for VAT will now be conditional on tracking turnover in a calendar year (i.e. from 1 January to 31 December), instead of in a consecutive 12-month period. The registration thresholds and the time limits for compulsory registration will change as follows:
- If your annual turnover exceeds the threshold of CZK 2 million (but not exceed CZK 2,536 million), you become a VAT payer from 1 January of the following year. An exception is the voluntary registration for VAT, which can be submitted to the tax office within 10 days from the date of exceeding the 2 million threshold. Then you become a VAT payer from the day following the date of exceeding the 2 million turnover.
- A new registration limit of CZK 2,536,500 is introduced. If you exceed this amount in a calendar year, you are obliged to register for VAT and you become a VAT payer from the day following the date of exceeding this limit.
Therefore, the new regulation abolishes the previously valid principle that you become a VAT payer from the 1st day of the second month following the month in which the threshold was exceeded.
Another significant change will concern the time limit for claiming VAT deductions. The current 3 years (still valid for advances and single-purpose vouchers) will be reduced to 2 calendar years following the tax year. The time limit for claiming input tax credit is now calculated from the beginning of the calendar year in which the claim arises and runs until the end of the second calendar year following. The changes will only affect liabilities for which the right to deduct arose from 1 January 2025. The deduction will be claimed as soon as the taxpayer has received a tax receipt for the transaction. However, there is a new obligation to correct, reduce or refund the claim if the related receivable is not paid within 6 months of the due date. The deduction can then be reclaimed if the invoice is paid by the payer within the aforementioned period.
Other changes contained in the amendment include:
- The deadline to correct the tax base in certain circumstances until the end of the seventh calendar year (the three-year period is replaced) after the taxable supply.
- From 1 July 2025, the abolition of the five-year time test for VAT exemption on the supply of real estate will come into force. Taxation will now only apply to the first sale (the first supply of the property after completion of the building or substantial alteration) and only until the end of the twenty-third month after completion.
Of course, there are many more changes in the amendment and we will happily help you navigate the issues. Do not hesitate to contact us if you have any questions.