VAT Payer 2026: When You Must Register, When Voluntary Registration Pays Off

TL;DR – VAT Payer in Brief

• Mandatory registration as a VAT payer once your turnover exceeds 2,000,000 Kč over the last 12 (rolling) calendar months – within 15 days after the month in which you crossed the threshold
• Voluntary registration at any time, if you want it
• VAT payer = you issue invoices with VAT (21%, 12%, or 0%), remit it to the state, BUT you are entitled to deduct VAT on your input invoices
• Penalty for late registration: 0.05% of the unpaid VAT per day, plus late-payment interest (CNB repo rate + 8%)
• It pays off if: your customers are VAT payers, you have large VAT-bearing inputs (equipment, materials), you export to the EU
• It doesn't pay off if: your customers are non-payers (private individuals, small self-employed), you have few VAT-bearing inputs

Who Is a VAT Payer

A VAT payer is an individual or company registered with the tax office as a payer of value added tax (a VAT number starting with CZ...). A VAT payer:

• Issues invoices with VAT (at rates of 21% / 12% / 0%, depending on the supply)
• Remits VAT to the tax authority monthly or quarterly
• Is entitled to deduct VAT on input invoices (reducing their tax liability)
• Files a VAT control statement every month (covering every invoice, both income and expenses)
• Files a VAT return monthly or quarterly

When You Must Become a VAT Payer (Mandatory)

After Exceeding Turnover of 2 Million Kč

If your turnover over the last 12 calendar months exceeds 2,000,000 Kč, you must register as a VAT payer within 15 days after the end of the month in which you crossed the threshold.

Note: the calculation uses a rolling 12-month period, not the calendar year. In other words, every month you check the sum for the preceding 12 months.

Example: In May 2026 you find that your turnover for the period May 2025 to May 2026 was 2.1 million Kč, so you must register by 15 June 2026.

What Counts Towards Turnover

• Revenue from the supply of goods and services in the Czech Republic
• Revenue from exports (both to the EU and outside the EU)
• Rental income (with the exception of certain long-term residential lettings exempt from VAT)

What Does NOT Count Towards Turnover

• Employment income (if you also have an employment contract)
• Capital income (dividends, interest)
• Income from selling tangible business assets
• Income exempt from VAT without entitlement to deduction (e.g. residential rental)

Penalties for Late Registration

• 0.05% of the unpaid VAT for each day of delay (from the day you should have become a payer)
• Late-payment interest at the CNB repo rate + 8% p.a. on the same amount
• During a tax audit, the tax office will retroactively assess VAT from the day you should have become a payer

When Voluntary VAT Registration Pays Off

Advantages

1. Your customers are VAT payers (B2B): they have no problem with VAT and can deduct it themselves. For you, this means a deduction with no impact on price.
2. Large input costs with VAT: if you buy equipment, materials, or services subject to VAT, the deduction means a saving of 21% or 12% on each item.
3. Exports to the EU: invoices without VAT (reverse charge) plus a full deduction on input VAT means substantial savings.
4. Investment at the start of business: if you invest 500,000 Kč in equipment, as a VAT payer you can deduct 21%, that is 105,000 Kč back.
5. The OSS scheme for digital products sold in the EU (mandatory once you exceed EUR 10,000 a year).

Disadvantages

1. Non-payer customers (private individuals, small self-employed businesses): the price effectively rises by 21% for them, putting you at a competitive disadvantage.
2. Administration: a control statement every month, VAT returns monthly or quarterly, and fines for mistakes.
3. Cash flow strain: you must remit VAT even on invoices your customer hasn't paid yet (unless you use the simplified regime available up to a turnover of 750,000 Kč).
4. Changing your price list is painful if you have established prices for non-payers, a 21% increase is a difficult psychological hurdle.

How to Register

Step 1 – VAT Registration Application

Via MOJE daně → "Submissions" → "VAT Payer Registration" → fill in:

• Identification (company ID, name, address)
• Reason for registration (mandatory / voluntary / OSS)
• Expected turnover
• Bank account for excess deduction refunds

Step 2 – Tax Office Approval

This usually takes 30-90 days. The tax office may require a security deposit (typically 10,000-100,000 Kč), particularly for newly established businesses or higher-risk sectors.

Step 3 – Your VAT Number Goes Active

Once approved, you'll receive notification of your VAT number (CZ followed by 8-10 digits). From the following day, invoice with VAT and file your returns.

What This Means in Practice

The Monthly Rhythm of a VAT Payer

• By the 25th of the following month: file your VAT return plus VAT control statement and pay the tax due (if you owe any)
• By the end of January each year: an annual recapitulative statement (if you make EU supplies)

Invoicing as a VAT Payer

Every invoice must include (§ 29 of the VAT Act):

• Your VAT number plus the customer's VAT number (if they are a payer)
• Sequential number, date of issue, date of taxable supply
• Tax base, rate, amount of VAT, price including VAT
• The label "tax document"

Detailed guide on how to issue an invoice.

Cancelling Your Registration

You can apply to cancel your registration if:

• Your turnover falls below 1 million Kč over 12 months (after being under the threshold for a year)
• You cease trading
• You meet other specific conditions

The tax office is not obliged to approve the cancellation. The process takes around 30 days.

Frequently Asked Questions

Can I be a VAT payer and use flat-rate tax at the same time?

No. Flat-rate tax excludes VAT payer status (it requires you to be a non-payer). If you want the flat-rate scheme, you must first cancel your VAT registration.

What if I exceed the turnover threshold but can't become a payer?

There is no exception. By law, you must become a payer. Either stop invoicing, or register (and start invoicing with VAT).

How do I calculate my turnover?

Add up all your revenue (excluding VAT) over the last 12 months. Most accounting software will show this automatically.

Does voluntary VAT registration pay off for a web designer or developer working for companies?

Usually yes, because your customers are VAT payers (limited companies), they can deduct the VAT, and you gain a deduction on hardware, software, and services. Run the numbers for your specific situation.

What is reverse charge?

A mechanism that shifts the tax liability. For certain supplies (construction, mobile phones, gold, supplies to VAT payers in the EU, and others), the customer, rather than the supplier, remits the VAT.

Related

• VAT calculator 2026 – calculating 21% and 12%
• VAT calculation 2026 – formulas, examples
• VAT control statement – a guide
• Flat-rate tax 2026 – calculator
• The OSS VAT scheme for digital products

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