As we informed you earlier this year (link here), the Ministry of Finance has prepared an extensive amendment to the VAT Act with expected effect from 1 January 2025 (some points later). On 30 October 2024, the amendment passed its third reading in the Chamber of Deputies and was approved by the Chamber of Deputies. It will now proceed to the Senate for further approval.

The major amendment to the VAT Act contains a number of substantial technical changes responding to developments in case law and findings from practice. One of the fundamental changes resulting from the amendment is the transposition of the European Directive concerning the regime for small enterprises established in another EU Member State that do not exceed local turnover of CZK 2,000,000 per calendar year. Such companies will not be subject to VAT in our country. The same will apply to Czech small businesses wishing to use this option in other EU Member States.  

The amendment also brings a change in the calculation of the turnover of companies. Currently, turnover is calculated over a period of 12 consecutive calendar months. The turnover will now be calculated per calendar year, which is also related to the new setting of the emergence of taxpayers. Small businesses that exceed CZK 2,000,000 in turnover during the year will become VAT payers only from 1 January of the following calendar year, unless they want to become VAT payers from the second day after exceeding the turnover. However, if the turnover exceeds CZK 2,536,500 (the EU-wide amount of EUR 100,000), they become VAT-liable the next day.

We will continue to monitor the progress of the legislative process and keep you informed about the development. We will also inform you about the amendment in more detail during the upcoming GT Forum (you can register for the event here).