Czech Republic - VAT reduced rates proposed to be consolidated, resulting in some reclassifications

20 July 2023

This article has been updated. It was originally published on 29 June 2023

The lower chamber of the Czech Republic parliament approved a recovery package on 14 July 2023 that would consolidate the reduced VAT rates, resulting in some supplies being reclassified for VAT purposes.

The Czech VAT system currently has three rates: a standard rate of 21% and two reduced rates of 15% and 10%. While the standard VAT rate would remain unchanged, the government has proposed to consolidate the two reduced rates into a single reduced rate of 12%. In addition, a new zero VAT rate would be introduced but only for books, including e-books.

These proposals would result in certain goods and services being reclassified and subject to a different VAT rate. The new 12% reduced rate would apply to a range of supplies of essential products (e.g., food, pharmaceuticals and medical devices, heating, etc.). Several supplies that currently are subject to the 10% or 15% rate would be reclassified as supplies subject to the standard rate, including services rendered by artists and authors and newspapers.

The bill still has to undergo the remaining steps of the legislative process, be signed by the president and published before it can become effective.

Petr Linx
BDO in Czech Republic