VAT registration for foreign companies in the Czech Republic: When does it apply to you?

VAT is a consumption and territorial tax. This means that the state where the movement of goods or services occurs intends to keep the tax revenue under its own control.

Why is home country VAT registration not enough?

Registration in your home country allows you to trade internationally, but it does not entitle you to physically hold stock in the Czech Republic or import goods here from countries outside the EU. As soon as you begin activities directly on Czech territory, you are classified by the Czech tax authorities as a foreign person liable to tax. If you conduct a transaction with a legally defined „place of supply" in the CZ, you must register locally and remit the tax directly to the Czech Republic.

When do you have to register for VAT in the Czech Republic?

The obligation to register arises on the very day you carry out your first taxable transaction in the Czech Republic. Unlike Czech-based companies, foreign entities are not subject to the 2 million CZK turnover threshold – you become a VAT payer immediately upon your first transaction.

Key scenarios include:

1. Import of goods from third countries and subsequent sale in the CZ: If you import goods (e.g., from China or the USA), release them into free circulation in the Czech Republic, and sell them here, you must have a Czech VAT ID.
2. Purchase of goods from another EU member state to the CZ: If you purchase goods within the EU and have them delivered to a warehouse in the Czech Republic, this constitutes an intra-community acquisition of goods with the place of supply in the CZ.
3. Manufacturing, processing, and taking over products in the CZ: If you have goods manufactured by a Czech partner and take delivery on Czech territory, there is an obligation to register.
4. Construction and assembly work on real estate: For services related to real estate, VAT is always governed by the location of the building. If you are building or installing technology in the CZ, you must invoice using the Czech VAT rate.

How to proceed with VAT registration in the Czech Republic?

The registration of a foreign entity does not take place at a standard local tax office. All agendas for non-residents in the Czech Republic are managed centrally by the Tax Office in Prague (Finanční úřad pro hlavní město Prahu, územní pracoviště pro Prahu 1).

1. Deadline: The registration application must be submitted within 15 days from the day the company became a VAT payer.
2. Documentation: You must provide an extract from the Register, a certificate of VAT registration in your home country, and evidence of economic activity in the CZ (e.g., contracts, purchase orders, or invoices).

Need help with VAT registration in the Czech Republic?

At Cato, our experts, including English native speakers, will ensure complete communication with the Tax Authority in the Czech republic, prepare your registration documents, and handle the subsequent filing of VAT returns and control statements.

Do you need professional advice? Contact us for a consultation.