VAT rate consolidation

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Czech Republic

05.02.23

VAT rate consolidation

Our earlier post commented on the Czech government’s proposal to consolidate their VAT rates. The Czech government are signalling further intent that this will be implemented as part of the Czech government’s wider fiscal framework. Currently, the following VAT rates apply in the Czech Republic:

21% standard rate
15% reduced rate
10% reduced rate

The Czech government is planning to consolidate the 10% and 15% rates into a new, single VAT rate of 14%, with the 21% VAT remaining unaffected. Inevitably, this will mean that goods formerly subject to the 10% VAT rate will find themselves subject to a higher VAT rate. It follows that the Czech government stands to gain considerably from an economic perspective ”“ with predicted figures initially forecasting gains of around 1 billion per annum. Such measures serve to demonstrate the far-reaching effects of VAT rate changes on the wider economy. The proposals will be sent to Parliament in June for review. Implementation of the consolidated rates is currently touted for 1 January 2024. The Czech Republic is a compliant territory for Tungsten Network and we are closely following developments in relation to the VAT rate change. If confirmed, Tungsten will support the VAT rate change and incorporate this as part of our e-invoicing solution in the country.