Vat refund to foreign persons when acquiring goods within the eu or when importing goods
Vat refund to foreign persons when acquiring goods within the eu or when importing goods
With effect from 1 January 2026, Section 83a of the VAT Act introduces a new VAT refund mechanism for foreign persons. The aim is to enable foreign persons to recover Czech VAT when carrying out certain transactions in the Czech Republic. Prior to this amendment, foreign entities that imported or acquired goods into the Czech Republic from abroad were obliged to pay VAT to the tax administrator, and its recovery was often administratively demanding. Under the new rules, VAT can be recovered through the VAT refund procedure if the goods are subsequently delivered to a VAT payer in the Czech Republic, for example.
It should be noted that with effect from 1 January 2025, the Czech rules for the deduction of import VAT in cases where the importer is not the owner of the goods have been tightened. In accordance with the case law of the CJEU, the right to deduct import VAT is generally denied if the costs of import are not directly included in the price of subsequent taxable supplies of the importer. This leads to more imports being made directly by foreign owners.
The new rule extends the possibility of Czech VAT refunds to a larger circle of foreign entities from non-EU countries, because compared to the previous regulations, it is no longer necessary to meet the condition of reciprocity.
Section 83a applies exclusively to foreign entities that are not registered as VAT payers in the Czech Republic or established in the EU. It covers situations where a foreign entity acquires goods from another EU Member State or imports goods from a third country, where the place of supply is the Czech Republic, and subsequently uses these goods for a taxable supply in the Czech Republic, for which the tax is declared by the customer under the reverse charge regime.
Under the previous rules, these transactions usually resulted in the foreign entity being obliged to pay Czech VAT on the acquisition of goods within the EU or on importation. However, entities established in third countries could not claim an appropriate VAT deduction if the principle of reciprocity was not complied with. Currently, this principle is confirmed only for the United Kingdom, Switzerland, Norway and Bosnia and Herzegovina.
Under the new mechanism, foreign entities can recover Czech VAT incurred in these situations without the need to register for VAT in the Czech Republic, even if the principle of reciprocity has not been met. The key condition is that the purchased or imported goods must be used within the economic activity of the foreign entity and for the purposes of subsequent taxable supply with the place of supply in the Czech Republic. In practice, this mechanism means a more efficient and proportionate way to comply with VAT obligations, especially in the case of one-off or project transactions.
However, this subsequent supply must be one in respect of which the customer who is a VAT payer or who has to register for VAT in order to receive certain supplies is obliged to declare and pay tax. In practice, a domestic customer declares VAT if a foreign supplier not established in the Czech Republic provides any of the following supplies:
- the provision of services – such as repairs of movable property, real estate services, cultural or sporting events, catering;
- supply of goods with installation or assembly, if the foreign supplier is not registered as a VAT payer in the Czech Republic;
- the supply of goods through networks or systems (e.g. electricity);
- supply of goods to a Czech VAT payer, if the foreign supplier is not registered for VAT in the Czech Republic.
As a result, the foreign entity does not apply Czech VAT to subsequent supplies that are subject to the reverse charge regime. The right to a VAT refund under Section 83a arises only after the subsequent supply has taken place, which determines the moment when the claim arises.
The VAT refund application must be supported by copies of the relevant tax documents proving that the VAT has been correctly declared or paid and that the legal conditions are met. These documents include an invoice or proof of import VAT relating to the acquisition or import of goods and a tax document issued for a subsequent taxable supply in the Czech Republic.
A foreign person is also obliged to provide an e-mail address in the application for a VAT refund. This allows the Czech tax authorities to communicate effectively regarding the application. However, if a foreign person grants a power of attorney to a Czech representative, the Czech tax authorities are obliged to communicate with this representative.
The deadline for submitting an application begins on the first day of the second calendar month following the calendar quarter in which the subsequent taxable supply took place and ends on the last day of the calendar year following the year in which the goods were acquired from another EU Member State or imported into the Czech Republic.
For example, if the goods are imported in March 2026 and the subsequent taxable supply is made in May 2026, the deadline for filing a refund request starts on August 1, 2026 and ends on December 31, 2027. These deadlines are important because a late submission may be rejected.
Any amount of VAT that is intended for refund will then be transferred electronically to the bank account provided by the foreign entity in its application.
Section 83a is a clear and effective mechanism that allows foreign businesses to recover Czech VAT without having to be registered as VAT payers in the Czech Republic. The key to a successful return process is careful planning, adherence to filing deadlines, and proper documentation.