Updated 7 November 2022

Who can apply to deregister?

To apply to cancel VAT registration, you must have been a VAT payer for at least 1 year, and your turnover over the past 12 months must not exceed the compulsory VAT registration threshold, which is CZK 1 million in 2022. However, this threshold rises to CZK 2 million from 2023. You can also apply to cancel VAT registration if you stop trading or all your activities are VAT-exempt.

What should you watch out for?

If you claimed input VAT on assets purchased while VAT-registered, take note. You need to check when you acquired these assets. You must monitor the adjustment period: 10 years for land and buildings and 5 years for other fixed assets.

If you stop being a VAT payer within five years of buying a car, for example, you must repay the proportion of VAT to which you are no longer entitled. For assets with a 5-year adjustment period, you must therefore repay 1/5 of the VAT claimed for each year remaining in that period.

For example, you bought a car on 10 January 2020 for CZK 100,000 excluding VAT. In your January VAT return, you claimed CZK 21,000 of input VAT and the state “refunded” that amount. If you wanted to leave the VAT regime on 1 January 2023, you would have to repay 3/5 of the VAT claimed. In this case, you would repay CZK 8,400. The principle is the same for land and buildings, but the adjustment period is 10 years. You therefore repay 1/10 for each year remaining in the period

If, typically, you also use a car privately and claim only a percentage of VAT, the calculation of VAT to be repaid becomes more complicated. In that case, I recommend not rushing into anything and seeking an accountant’s advice instead.

You make this VAT „repayment“ to the state in your final VAT return. If you leave the VAT regime on 1 January 2023, for example, you report all these „repayments“ in your December 2022 VAT return.

Inventory and advance payments

If, on the day you leave the VAT regime, you hold goods or materials for which you claimed input VAT, you must repay that VAT too. As a newly non-VAT-registered business, your stock of goods and materials should therefore include VAT. You repay the previously claimed VAT to the tax office in your final VAT return. This is the same principle as on joining the VAT regime, when you can claim VAT in your first return on stock you already hold.

You must likewise repay VAT claimed on advance payments for goods and services not yet supplied, which you will receive only after becoming a non-VAT payer :-).

Completing the application

You can complete the deregistration application on the Financial Administration website, giving your identification details and the reason for deregistration. You can also choose whether to become an identified person for VAT purposes after cancelling full VAT registration. You can therefore move seamlessly from full VAT registration to identified-person status.

You cease being a VAT payer on the day after the deregistration decision is delivered.

To complete the deregistration correctly and assess your overall situation, I recommend discussing everything with a capable accountant :-).

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