Buying Facebook ads or software from the USA? Watch out for identified person status

Simply paying for a ChatGPT subscription, a Canva tool, or launching a Facebook ad can turn you into a so-called identified person for VAT within a minute.

This status means that you remain a non-VAT payer for domestic trade, but for international transactions, you must register for tax and file returns.

What is reverse-charge and how does it work?

The "reverse charge" principle (reverse tax liability) means that the obligation to declare and pay VAT moves from the seller to the buyer.

When you buy software from an Irish company, they will invoice you an amount without VAT. You must report this transaction to the Czech tax office and pay the Czech VAT rate (usually 21%). However, as an identified person, you are not entitled to a refund of this tax, so the purchase actually becomes more expensive by this amount.

Who is most often affected by this obligation?

1. Users of advertising platforms such as Meta Ads, Google Ads, LinkedIn Ads.
2. Subscribers of SaaS tools such as Adobe Creative Cloud, Canva, Slack, Zoom, ChatGPT, and others.
3. If you use payment gateways like Stripe or sell through Amazon.

How does registration work and who performs it?

Registration for identified person status is not optional; it is mandatory.

1. Application: You must submit an application for registration within 15 days from the day you received the first service from abroad.
2. The process: Registration is performed by the local tax office. Administratively, you can handle it yourself through the MOJE daně portal, or leave it to professionals.

At CATO, we handle registrations for our clients based on a power of attorney. We ensure correct classification and subsequent filing of VAT returns and summary reports, which you must submit by the 25th day of the following month (if a purchase took place in that month).

What to watch out for

1. Foreign payment gateways: Even using services like Stripe or PayPal to receive payments can put you in the identified person regime because you pay fees to a foreign entity.
2. Fines for silence: Tax offices in 2026 automatically match data from the European VIES system. If a foreign company invoiced you without tax and you did not register, the office will find out.

Managing identified person status can be administratively demanding, so it does not pay to underestimate it. At CATO, we use digital invoice extraction, which automatically recognizes these transactions and prepares the documents for reporting.

I want to handle VAT registration without stress