Who is an identified person?

An identified person is a kind of hybrid between a non-VAT payer and a VAT payer. For Czech invoices, they act as a non-VAT payer, while for cross-border transactions they act as a VAT payer. Unlike a VAT payer, an identified person does not have as many administrative obligations, but also does not enjoy the right to deduct input VAT.

When do I become an identified person?

You become an identified person in the following cases:

  • You buy ordinary goods from other EU Member States for more than CZK 326,000

If the total value of goods purchased from the EU in one calendar year exceeds CZK 326,000, you become an identified person.

  • You receive specified goods from another Member State

Unfortunately, there are a few exceptions involving goods whose purchase makes you an identified person immediately:

      • goods subject to excise duty (alcohol, tobacco, fuel)
      • a new means of transport
      • goods supplied with installation (the supplier delivers goods and also installs them, e.g. a production line or air conditioning ..)
  • Conversely, you never become an identified person if you buy only goods that are VAT-exempt in the Czech Republic (medical goods, respirators, postage stamps). This category is something of a rarity.
I have found out I am an identified person—what now?

An application for registration in this regime must be submitted within 15 days. 

If you become an identified person because you exceed the CZK 326,000 threshold, you apply within 15 days of exceeding it. Personally, I would attach to the tax office registration a list of purchase invoices on which you base your conclusion that you exceeded the threshold (an Excel table with columns for invoice issue date, supplier, supplier’s country, amount in foreign currency and amount converted to CZK using the Czech National Bank’s daily exchange rate). If you buy goods from the EU, I recommend maintaining such a table for an overview, so you know whether and when you have exceeded the threshold. Some online software – such as Fakturoid – can help you keep these records. You pay VAT starting with the invoice that takes you over CZK 326,000.

If you become an identified person because you purchase specified goods, you apply within 15 days of the issue date on the purchase invoice. Again, I would personally attach the invoice showing why you became an identified person to the registration application. As in the previous case, you pay VAT starting with the invoice that triggers registration. 

Another option is voluntary registration. If you know you will purchase goods exceeding CZK 326,000 on a single invoice, or you plan to import a larger quantity of wine from the EU, for example, you can ask the tax office for voluntary registration. In my view, this can be beneficial in some cases, as I explain below.

You can register yourself using the online form on the Ministry of Finance website. If you need help registering and would also like ongoing administration of your identified-person obligations, contact me! 🙂

So what are my obligations afterwards?

When buying goods from another EU country, state that you are an identified person and give the supplier your VAT number assigned by the tax office on registration. The supplier will issue an invoice for the goods at 0% VAT. You then pay VAT on those goods to the Czech treasury through a VAT return. 

As a result, you pay no foreign VAT on these purchases, but instead Czech VAT. Voluntary registration before making a purchase can therefore be advantageous when buying goods from an EU country with a higher VAT rate than the Czech Republic (Hungary 27%, Croatia, Denmark and Sweden 25%, Finland and Romania 24%, etc.). With larger purchases, you can even make a saving. However, you also need to allow for the administrative costs of registration and accounting for VAT. 🙂

Voluntary registration also pays off for those who know their next purchase will take them over the CZK 326,000 threshold or that they will buy, for example, alcohol in large quantities. These transactions would make identified-person registration compulsory – giving the supplier your VAT number before these purchases avoids paying VAT twice and the additional administration of applying for a refund of foreign tax.

VAT return must be submitted by the 25th day of the month following the month in which you acquired the goods. If the 25th falls on a public holiday or weekend, the deadline moves to the next working day. The calculated VAT must be paid and credited to the tax office’s account by that date. An identified person can never become entitled to an input VAT deduction because, unlike a VAT payer, they have no such entitlement. The state will therefore never refund money to you in this situation.

If you keep tax records, the VAT paid is expenditure for you; in accounting, it is an expense.

If you are unsure, do not hesitate to get in touch and we can look at it together. 🙂