The Czech Ministry of Finance wants to ask the European Commission for an increase of the VAT exemption to small businesses from one million CZK to CZK 2 million. It wants to introduce this increase before the European VAT Directive will be effective.
The VAT directive allows member states to decide to raise the limit to up to € 85,000 from 2025. This change will significantly change the conditions for the VAT registration in the Czech Republic. Obtaining an exemption to the earlier increase, the ministry said, should result in a reduction of administrative costs and increase the number of freelancers who will be able to benefit from the flat-rate tax. The Ministry also points out that this limit was not increased for more than 17 years and thus does not respond to the change in price levels.
If the exemption is granted, it would like to raise the limit as early as next year. It now estimates that it should reduce the number of VAT payers by around 105,000.
Nevertheless the businesses not having their seats in the Czech Republic cannot benefit from this change because they are usually obliged to register to the Czech VAT because of the first transaction which is taxable in the Czech Republic.
Yourtaxes.cz – Your VAT registration in the Czech Republic
From January 1, 2024, a number of significant changes will take place in the Czech tax system - the corporate tax rate will increase, VAT rates will change and, last but not least, the tax burden on natural persons will also increase.
In addition to changes in the area of corporate income tax, the Czech Ministry of Finance is preparing to adjust VAT rates. VAT rates should change from January 1, 2024.
The Czech Republic is planning extensive changes to its tax system, including changes to corporate income tax rates, effective from the beginning of 2024, which should help reduce the state budget deficit.