Freelancers: Report and pay VAT for buying services from abroad

This article is a part of our series of articles about VAT:

1. 1. Register as an Identified Person for VAT
   2. Report your EU services for VAT
   3. Report and pay VAT for buying services from abroad (here)

• • plus, a general guide about all your obligations when being self-employed

Buying services from abroad

As a business person, a self-employed freelancer from the Czech Republic, when buying services from a business registered in another country (doesn’t matter whether they are in an EU or non-EU country or if they are a registered VAT-payer or not), you must consider the Value Added Tax (VAT). You should also report the transaction, and pay the VAT.

For example, when you purchase a service for your business activities, for example, you pay for a Facebook or Google ad, or any other service registered in Ireland or the USA, you receive the invoice without VAT, but then you must calculate the Czech VAT (21% in this example) and pay it here. 

We prepared a step-by-step guide, in cooperation with a certified tax advisor Jana Střelická, from the tax consulting company Auditor.eu.

Do I have to report buying services from a business from abroad?

A) Yes, if you buy services for your business from a provider outside of the Czech Republic, you have an obligation to report the transaction and submit a “VAT return” (přiznání k DPH) for the month when you bought these services from the service provider. In months when no services are charged, you are not obliged to report anything. 

B) When buying services for private use and not for your business, you do not report the transaction for VAT purposes.

How to fill in a VAT return as a VAT-identified person, step-by-step

1] Upon a receipt of B2B services from abroad (EU or 3rd country), you must to submit a VAT return (= “Přiznání k DPH”) for the month when the services were received – within 15 days of the date of taxable supply or on the last day of provision of services for a particular month.

2] Sign up to your DIS+

Go to adisspr.mfcr.cz/pmd/home/prihlaseni-do-dis (the web is only in Czech, so use your browser’s translator). Sign in with your “datová schránka” data mailbox login, and agree to the transfer of your data to the Tax office. Once in DIS+, click on the name of the person who must report the VAT.

3] From the menu select “FORMS”, click on “New electronic form”,  and choose Value Added Tax and particularly “Value added tax return valid from January 1, 2011”.

4] You have entered the form. Fill in the data.

Header – confirm data pre-filled from DIS+ by clicking on the dotted boxes (locally competent tax office, VAT ID No.) + complete Month and Year for which the VAT return is submitted, choose an identified person and choose your economic activity from the menu

• Payer – check and confirm your personal data pre-filled from DIS+ by clicking on the dotted boxes
• VAT return lines – fill-in data per received invoice
  • row 5 for EU, row 12 for non-EU services
  • value of all supplies in CZK = 1,000 EUR x 25 = 25,000 and related VAT (21%) = 5,250
  • FX rate by CNB valid as of the date of taxable supply (find the rate here)

• VAT due (row 64) – to be paid to Tax Office

• Conclusion – automatic check of filled-in data is done. If there is Error notification, you have to deal with correction of the errors via Error log. 

Check the form for errors. Once OK, you will be able to submit the document “sending the document” – odeslání písemnosti. Confirm on the next page again, by clicking on “SUBMIT.”

And then-

congratulations! You are all done. You can find the submitted reports in the respective section in your DIS+.

Paying the VAT

Finally, you must pay the VAT within the same deadline as for VAT return submission, i.e., within the 25th day of the following month to the Tax office (Finanční úřad). You will find the bank account details at financnisprava.gov.cz

For example, if your locally competent Tax office is the Tax office for the South-Morevian region, the bank account is 705-77628621/0710 (prefix 705 means that the payment relates to VAT).

Don’t forget to identify the payment with your unique business identification number “IČ” as the “variable symbol”.

More about VAT

This article is a part of our series of articles about VAT:

1. Register as an Identified Person for VAT
2. Report your EU services for VAT
3. Report and pay VAT for buying services from abroad (here)

• plus, a general guide about all your obligations when being self-employed

The article was written in cooperation with a certified tax advisor Jana Střelická, from tax consulting company Auditor.eu. Feature picture source: canva.com