Invoicing and Tax regulation in Czech Republic
Invoicing Regulation in Czech Republic
In the Czech Republic, invoicing regulation is governed by the Act no. 235/2004 Coll., on Value Added Tax (VAT). All VAT-registered entities are required to issue invoices for provided goods or services, regardless of whether it's a B2B, B2C, or B2G operation. Online traders also need to provide electronic invoices to buyers. The invoices must contain specific details like supplier-customer details, VAT ID, invoice number, description and quantity of goods/services, the date, and the total amount.
Real-Time Reporting / Fiscalization
Mandatory real-time reporting and fiscalization in the Czech Republic went into effect on December 1, 2016, as per the Electronic Registration of Sales (EET). This law applies to B2B, B2C, and B2G businesses including the hospitality, retail, and wholesale sectors. All reports must be transmitted to the Czech Financial Administration in real-time. Violation of this regulation can lead to hefty fines.
In Czech Republic, e-invoicing is equally valid as paper invoicing, and formats like PDF are accepted. However, from November 2020, it became mandatory for suppliers to send e-invoices to all Czech public entities. B2G suppliers now have to submit electronic invoices to these entities through the national e-Invoicing portal. For B2B and B2C, e-invoices can be sent via email or any agreed upon digital medium.
The standard VAT rate in the Czech Republic is 21%, while reduced rates of 15% and 10% apply to certain goods and services. It's mandatory for businesses to register for VAT if their turnover exceeds CZK 1 million in 12 consecutive months. B2B, B2C, or B2G entities are required to submit a VAT return, summarizing all taxable supplies and inputs, by the 25th day of the month following the tax period. Noncompliance can lead to penalties, in addition to the respective tax obligations.