VAT registration threshold hike; speedier bad-debt relief; catering VAT rate simplifications
The new Czech government has presented and new draft programme, including a VAT package for 2026 with four headline changes: (1) a substantial VAT threshold registration rise; (2) faster bad-debt relief by halving the wait to three months; (3) aligning the VAT rates for catering; and (4) introducing a 0% VAT rate on prescription medicines.
1) Rise in VAT registration threshold from CZK 2m to up to CZK 2.02m
The turnover threshold that obliges a domestic business to register for VAT would be lifted significantly above current CZK 2 million. The intent is to cut administrative burden for micro- and small enterprises, letting more of them operate outside VAT.
EU sets €85,000 limit since 2025
Since 1 January 2025, the EU’s modernised small-enterprise regime allows national thresholds up to the equivalent of EUR 85,000 (with guardrails and anti-fragmentation rules). If the Czech Republic aims to set a figure materially higher than CZK 2 million (≈ EUR 80k) and possibly beyond the EU ceiling, it will trigger discussions at EU level to ensure compatibility with the common system. Expect debate around competitiveness, tax neutrality, and potential cross-border distortions.
2) Faster VAT refunds on unpaid invoices: from 6 months to 3 months
The waiting period before a supplier can adjust output VAT on unpaid invoices would drop from 6 months to 3 months. This is effectively an acceleration of bad-debt relief.
3) Rate alignment: catering services & served non-alcoholic beverages at 12%
A single 12% VAT rate for catering services and the serving of non-alcoholic beverages, removing frictions created by mixed supplies and edge-case product distinctions.
4) 0% VAT on prescription medicines
A zero VAT rate for prescription-only medicines. This is a policy lever to reduce out-of-pocket costs for patients and ease health-system pressures without removing items from the VAT system altogether (0% rate keeps invoices and input tax deduction intact for suppliers).
