The Czech Republic is going to introduce a new VAT rate into its VAT legislation with effect from 1 January 2015.
On 6 November, the president of the Czech Republic signed the amendment to the current VAT law introducing a VAT rate of 10% from 1 January 2015. As a result of this, the Czech VAT law will have two reduced VAT rates.
The new VAT rate of 10% will apply to the following supplies:
- supplies of books,
- supplies of medicines,
- supplies of pharmaceuticals and,
- supplies of baby food.
What does it mean for you?
Businesses should review their contracts to identify whether their supplies will be subject to the new reduced rate. Having done so, businesses should check and adjust their agreements, invoicing procedures and ERP systems to be compliant with the new rules. In addition, businesses should make sure that where they purchase goods subject to the new VAT rate, valid VAT invoices with the correct amount of VAT are received so that input VAT recovery is not jeopardized.