In July 2016 new rules about goods delivery to Czech purchasers took effect. Similar reverse charge principle is being applied already in the European Union for services. You may be familiar with the principle already but the rules for goods are fairly specific and can be tricky.
If a company is registered in the EU for VAT and is selling goods to a Czech VAT payer, a Czech VAT registration is not required as the reverse charge principle is being applied. The EU VAT payer will invoice the Czech VAT payer without VAT for the goods delivered. The Czech VAT payer will declare the VAT in their return.
If a company (trader) which is not VAT registered in Czech, buys goods in the Czech Republic and afterward the goods are being sold and delivered in the Czech Republic to a VAT payer, VAT registration of the trader is not needed as the Czech buyer must admit VAT in their VAT return.
What to be careful about?
If goods are sold to a Czech not registered for VAT
Incoterms – the business conditions relating to the relevant place for the goods to be delivered
Moving of business property to or from the Czech Republic
The creation of a triangular goods delivery model could be considered as an opportunity to avoid Czech VAT registration when delivering goods to a Czech VAT payer.
Reverse charge rules for goods delivery open up more opportunities about how to shape specific business cooperation without the need for the seller to be VAT registered. On the other hand, it is crucial to be careful about situations which could occur relating to goods delivery to the Czech Republic as VAT registration is still required in many cases.
Do you have questions to this topic, please, let us know.
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