We flew to Prague on your behalf in order to speak with Dr. Schaffer and Mr. Felenda, two Tax Consultants from the law office of Schaffer und Partner s.r.o. in Prague. Our conversation dealt with the peculiarities and the handling of tax concerns, which German online sellers have, who have warehouses in the Czech Republic and who participate in the EFN or PAN-EU network from Amazon.
1. Tax Registration in the Czech Republic – yes or no?
Most definitely! As in most other European countries, those who maintain a permanent presence (Amazon warehouse) in the Czech Republic and make resulting sales as an online seller must also register and pay for Taxes in the Czech Republic. To continue selling like this, Tax registration is unavoidable.
2. How does Registration work?
First and foremost, there are a number of documents to collect. This includes, for example, a certified copy of your personal identification card, a certified copy of your commercial registration (when available) and a confirmation from the Tax Authorities, that you are in fact an existing company. Basically, certification must be done by a Notary and in many countries the so-called Apostille is also necessary. This is then confirmed by the district court and that the certifying notary exists. In the Czech Republic this is not necessary.
The gathered documents must then be translated into Czech and submitted to the Ostrava Tax Authority along with an application for a tax number. This process is ideally carried out by a local tax consultant, who is then available to respond to questions from the Tax Authority.
Because the Tax Authority responsible for issuing tax numbers has recently changed, the processing time can be long. Be sure to plan to join the EFN or PAN-EU network in a timely manner.
3. The Tax Number has arrived, what comes next?
Now that you have an issued tax number you can begin to sell from the Czech Republic. If you happened to make sales on Amazon before getting a tax number, then you should get in contact with us right away. We will then coordinate the necessary corrections with the responsible tax consultants in Germany and the Czech Republic.
4. Orders are in, goods are sent out, and invoices afterwards?!
Invoices? Yes, invoices! In the Czech Republic it is obligatory to prepare an invoice for all sales that are delivered. This even includes a few more requirements than our German invoices. Thus, in addition to the normal details for deliveries in the B2B sector, the VAT ID number of the customer and the supplier must always be indicated. Furthermore, all invoices must be written in Czech and issued in Czech crowns (CZK – Czech koruna).
5. VAT Reporting
Tax Returns vary across Europe. In the Czech Republic this comes with a total of 3 forms, which meanwhile can be completed and submitted online. However, these forms are only available in Czech. If you do not speak excellent Czech we advise you to rely on a local tax consultant. There are different methods to transfer your sales figures. The simplest and most error-free way is to transfer your sales figures and the dates processed. In addition, the first invoice should also be submitted in paper for the first declaration, which must also correspond to the above-mentioned requirements.
6. Delivery Thresholds and Opting
As in all countries, it is also important with regards to Czech sales that the delivery thresholds are monitored and the results are included in the tax evaluation. For example, if the delivery thresholds to Germany are exceeded (100,000 €) then the sales are no longer taxed in the Czech Republic but in Germany. Whoever does not want to wait until this point can take a shortcut: Opting for delivery threshold status. It would then be explained to the Tax Authority that the application of the distance selling threshold does not apply and that from now on all sales from the Czech Republic to Germany will also be taxable in Germany.
When does it make sense to opt-in? Whenever the tax rate in the recipient country is more favorable than that of the sending country. In our example, this would be the case: Germany 19% < Czech Republic 21%.
Important: Opting does not free you from the requirement to submit a VAT return. Packages sent from a Czech warehouse to other countries can still trigger taxes.
7. Tax Authority Audit
Audits from the Czech tax authority usually follow the same pattern as in other European countries. The documents are requested from the company or the tax representative and then reviewed by the tax authority. The documents must be complete and written in Czech. It is strongly recommended to have a local tax consultant give support to the audit process.
The process in the Czech Republic is relatively easy. If you do not speak Czech, there is no way to avoid the need to work with a local tax consultant. If you happened to make Amazon sales before having a tax number, the process is relatively easy to correct. Nevertheless, we strongly advise you to first become familiar with the special tax issues in the respective countries before you register. Make sure to have a tax number before you activate the Amazon network. It applies here too: when the first sale from the Czech Republic is made, there is no turning back.
AccountOne not only handles the generation of Czech sales figures but also reports them to the appropriate tax consultant. In addition, we handle tax registration in the Czech Republic and with our available cash pool we ensure that timely payments are made for applicable taxes. In the case of a late registration, we will coordinate the necessary corrections between Germany and the Czech Republic.