How is turnover for VAT purposes determined?

No entrepreneur can avoid registering for value added tax (VAT) when sales are higher. The obligation to pay VAT depends on the amount of turnover. We will advise you how to calculate it correctly.

Who is obliged to pay VAT?

According to Section 6 of the VAT Act, a taxable person (simplified as an entrepreneur carrying out economic activity) with its registered office in the Czech Republic, whose turnover in a calendar year exceeds:

• CZK 2,000,000 - it is compulsorily registered for VAT from 1 January of the following year (or voluntarily immediately);
• CZK 2 536 000 (this amount corresponds to the conversion of EUR 100 000) - it is obliged to register immediately, i.e. with effect from the day after exceeding this threshold.

Did you know that the rules for compulsory VAT registration have changed in recent years? As recently as 2024, turnover was tracked over 12 consecutive months instead of a calendar year and there was only one limit of CZK 2,000,000 - and a few years before that, it was as low as CZK 1,000,000.

An exception is made for persons who only carry out exempt supplies without the right to deduct tax (e.g. various financial services, except for the management of client assets, which is not exempt from 2025).

What counts as turnover for VAT?

The VAT Act (Section 4a) defines turnover as the aggregate of the remuneration, exclusive of tax (including any price subsidies), due to the entrepreneur (taxable person) for all transactions carried out by him with the place of supply in the domestic territory. You can think of this as, for example, all the amounts invoiced for products you have supplied to customers.

They are not included in the turnover for VAT purposes:

• Charges for the supply or provision of fixed assets, unless they are the basis of the business.
• Advances for taxable supplies and transactions with a place of supply outside the country (e.g. renovation of foreign property or provision of consultancy services to a business from another country).

What about the deadlines for exceeding the limit?

When calculating the amount of turnover for a given period, the date of the taxable supply (or exempt supply with a right to deduction) and the amount to be received by the entrepreneur as consideration are always decisive. It is therefore irrelevant when the invoice is actually paid.

According to Section 94 of the VAT Act, you must register as a VAT payer with the tax authorities if you exceed the turnover limit. You have up to 10 working days from the date of exceeding the amount (as of 2025, the earlier deadline of 15 days after the end of the calendar month in which you exceeded the decisive turnover amount no longer applies).

You notify your registration after you have exceeded the turnover of CZK 2,000,000, at which point you can choose whether you want to become a VAT payer voluntarily immediately or compulsorily from 1 January of the following year. If you decide to wait and in the same year you exceed the turnover of CZK 2,536,000, you have to notify the VAT registration again.

Do you have any questions? You can find more information in the article on VAT registration. Our specialists will also be happy to advise you on your taxes. Contact them using the form below.