Overview of changes to value added tax from 1 January 2025

As part of the forthcoming changes, a significant intervention in the VAT Act is also planned. Below we bring you a list of the biggest changes as of the date of publication of this text.

Changes to VAT turnover

• New period for calculating turnover: turnover will be calculated from 1 January to 31 December of a given year.
• VAT registration: if the turnover for January to December exceeds CZK 2,000,000 (and does not exceed CZK 2,536,500), the entity will become a VAT payer from 1 January of the following year. If the subject wishes to become VAT-liable earlier, he can apply within 10 working days of crossing the threshold, thus becoming VAT-liable from the following day.
• Exceeding the higher limit: If the turnover exceeds CZK 2,536,500, the subject will become liable for VAT from the second day after exceeding the new limit.

Other changes in the field of VAT

• Reverse charge: It will also apply to certain cleaning services, including general cleaning of buildings and industrial cleaning services.
• Reduction of the time limit for claiming the deduction: The time limit will be reduced from 3 years to 2 consecutive calendar years.
• Extension of the time limit for correction of the tax base: The time limit for correction will be extended from 3 to 7 years. In the event of legal proceedings being initiated, the time limit will not be interrupted.
• Refund of tax deductions on outstanding liabilities: New obligation to refund tax deductions after 6 months from the due date of the liabilities.
• Deduction for cars: Possible change or abolition of the car deduction limit (CZK 2,000,000) in 2027.

Real Estate

• Time test for immovable property: the 5-year time limit for claiming the exemption on the supply of immovable property is abolished to simplify the rules and bring them in line with other tax rules.
• Limit for substantive change: In the case of a substantial change, there will be a reduction from 50% to 30% of the value of the property. This will have an impact on the running of the exemption period on delivery, which will be recalculated.
• Building land: there will be a clarification of the definition of building land as per the municipality's planning documentation.

We will monitor any further changes and keep you informed.
If you have any questions, please do not hesitate to contact the PKF APOGEO Tax team.

Authors: Daniel Vladyka, Lívia Vaškaninová