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Mandatory registration for value added tax

If the domestic taxable person achieves a turnover of € 49,790, he / she is obliged to file an application for registration as a VAT payer by the 20th day of the month following the end of the month in which the turnover was achieved. After submitting a registration application, the tax administrator should verify the information contained in that application and, if true, that is to say, the taxable person should register the taxable person, issue his tax registration certificate and assign his taxpayer identification number. value added. The tax administrator is obliged to do so within 21 days from the date of delivery of the application. The taxable person becomes the taxable person on the day specified in the tax registration certificate

Legal registration for value added tax

If a legal person or a natural person acquires in the Czech Republic tangible and intangible assets within the acquired business or part of the business of the payer constituting a separate branch, it automatically becomes a taxable person on the date of acquisition of the business or part of the business.

The same regime of statutory registration of the payer of value added tax is governed by the legal successor of the payer who disappeared without liquidation from the day he became the legal successor. The legislature, however, incomprehensibly links this statutory registration to the fact that the legal successor is a taxable person. However, it is evident that on the day that the payer 's legal successor became that legal successor, he assumed all the assets and liabilities, including the taxable person' s position of his legal predecessor. Ultimately, 'proof of taxable person's legal successor' is, according to the practice of the tax authorities, an area in which tax authorities use their position for their own assessment of whether or not it is lawful registration.

The taxable person shall also become a taxable person who delivers the construction, its part or building land or receives payment before its delivery, on the earlier date.

In the case of statutory registration, there is no registration procedure under the Tax Code upon request, but payers are legally obliged to report the fact on the basis of which they have become payer. They are obliged to fulfill this obligation within ten days from the date of occurrence of the fact that constitutes legal registration for value added tax. Within the same period they are also obliged to submit documents proving the origin of this legal registration. The task of the tax authorities is to verify and compare the facts with the information in the notification and the documents submitted. Tax authorities, if legal registration has occurred, ie the information in the notification and documents are true and correct, it is the duty of the tax administrators to register the taxpayer, issue a tax registration certificate and assign him a tax identification number within ten days from the date of delivery and documents certifying this. If the tax office does not register the person, it will issue a decision and no appeal can be lodged against the decision.

However, in statutory registrations, tax administrators often follow procedures similar to registration procedures on the basis of an application, examining various facts that ultimately cannot affect the status of the payer of value added tax by law (as is the case, for example, the tax authorities tend to challenge the status of the legal successor as a taxable person).

Voluntary registration for value added tax

Mandatory registration is tied to turnover. In addition, the law also allows for voluntary VAT registration. A taxable person who has not generated a turnover of € 49,790 may also apply for tax registration. The condition for voluntary registration is that the taxable person applies.

A taxable person for the purposes of the VAT Act is any person who independently carries out any economic activity, whether for profit or not. Pursuant to the methodological instruction of the Tax Directorate of the Slovak Republic, any activity from which income is generated is considered an economic activity - business. A business for VAT purposes therefore includes:

  1. activity of producers, traders and suppliers of services including mining, construction agricultural activity,
  2. activities performed as a freelance profession under special regulations (eg: experts, interpreters, bailiffs, notaries, private veterinarians, patent attorneys, ...),
  3. mental creative and sporting activity,
  4. use of tangible and intangible assets for the purpose of achieving.

However, a person who has not yet started an economic activity at the time of application can apply for voluntary registration, but registration is necessary in order to prepare for future business. According to the binding interpretation of the European Court of Justice (C-268/83), the preparation itself for future taxable transactions is to be considered, in terms of the uniform VAT system applied in the EU, as an economic activity (for example goods, and can therefore apply for voluntary registration already at the beginning of the preparatory work, for example, also when acquiring the right to the future purchase of real estate, where the construction intent is to be realized).

According to the case-law of the court, the tax authority should not distinguish between the acquisition of the right to a future transfer of ownership of the property and the acquisition of the property itself. In addition, the principle of the neutrality of VAT on the burden on business requires that the first investment expenditure incurred for the purpose of starting a business is necessarily regarded as an economic activity. If such activity had not commenced until the assets were actually used, that is, until taxable profits were made, that would be contrary to the principle of neutrality.

"The acquisition of the right of future transfer of property rights to the part of the building to be constructed for the purpose of renting such premises properly may be regarded as an economic activity within the meaning of Article 4 (1) of the Sixth Directive. the intention has been declared supported by objective evidence, such as the demonstration of a concrete adaptation of the premises proposed for construction to commercial use."

C 268/83 - D.A.Rompelman and E.A.Rompelman-Van Deelen v Minister van Financiën

Therefore, the tax authority does not have to grant each application for voluntary registration. Applications for voluntary registration may not be accepted by the tax authority if it has evidence that the applicant does not intend to conduct taxable transactions in the future. It should be recalled that in this case, if the registrant only demonstrates the intention to conduct a business, in the case of refusal of registration, it is the duty of the tax authorities only to prove otherwise. In fact, however, not only the practice of the Slovak tax authorities, but even the regional courts, attributes such refusals to the taxpayers, which is a significant manifestation of non-compliance with the application of Council Directive 2006/112 / EC on the common system of EU value added tax.

At present, in the case of voluntary registration, if the applicant is not yet directly engaged in a taxable activity, this does not justify the lodging of the tax guarantee, as has been the case so far. Similarly, if the voluntary registrant fails to lodge a tax guarantee within the statutory period, this fact does not affect his status as a taxable person, since the tax administrator will recover the outstanding balance of the guarante.

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Application for Income Tax and Value Added Tax registration