On 31 January 2020, the United Kingdom left the European Union (EU) and became a third country for VAT purposes from 1 February 2020, in accordance with the Withdrawal Agreement. The UK and the EU agreed on a transitional period until 31 December 2020, during which the UK remained subject to all EU law and trade between themselves was temporarily conducted on the basis of EU single market rules. From 1 January 2021, the transitional period will no longer apply and VAT refunds from the Czech Republic will have to be made in accordance with the rules on VAT refunds to third country non-nationals.
The only exception concerns the acquisition of goods in the Czech Republic by a taxable person established in Northern Ireland who has been allocated a VAT number with the prefix XI. In these cases, the EU VAT refund system applies.
Refunds can only be claimed by taxable persons who are not established in the EU or who do not have a VAT permanent establishment in the EU. The foreign person is entitled to a refund of VAT on goods purchased or services rendered in the Czech Republic or on the import of goods if
Another exception is the performance of a selected supply, for which the special one-stop scheme applies.
VAT is refunded to the taxable person under similar conditions under which Czech taxable persons may claim an input tax deduction, i.e. in particular the condition that the taxable supply received for which the refund is claimed is used by the taxable person for its economic activity must be met.
The foreign person submits a refund application to the tax office in the capital city of Prague. The refund application must be submitted on the form prescribed by the Ministry of Finance; the application cannot be submitted electronically. The refund application must be accompanied by the bills issued by the taxpayer or the customs clearance with the respective import VAT and the proof of payment. The application must be accompanied by a written declaration by the foreign person that he or she has fulfilled the conditions for the refund set out in the Czech VAT Act during the period for which the refund is requested.
The period for applying for a VAT refund must cover at least three consecutive calendar months of a calendar year, but may not be longer than one calendar year. The application for a VAT refund for the calendar year in question must be submitted by 30 June of the following calendar year at the latest, otherwise the claim will be forfeited. The tax is refunded to the bank account specified by the claimant in the refund application. VAT is refunded only if the amount of the refund is at least CZK 1,000 per calendar year. The Czech VAT Act defines the types of goods for which the tax cannot be refunded. These include, for example, goods and services for personal consumption, goods and services related to the representation of a foreign person, telephone charges, taxi services and fuel with the exception of diesel.
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VAT refunds are granted to UK persons under similar conditions under which Czech persons may claim the VAT refunds, i. e. the purchases must be used for the economic activity of the applicant.