VAT-Identified Person: What It Is
VAT-Identified Person: What It Is and What Your Obligations Are
If you're a self-employed non-VAT payer who purchases services from foreign companies, sells services to the EU, or acquires goods from abroad, you may be required to register as a VAT-identified person. This status is often confused with being a VAT payer, but it works in a fundamentally different way — you remit VAT but have no right to deduct input VAT. Let's take a detailed look at what a VAT-identified person means, when you become one, and what to expect.
What Is a VAT-Identified Person
A VAT-identified person (IP) is a special tax status within the VAT system that sits somewhere between a non-VAT payer and a VAT payer. It refers to a taxable person (typically an OSVČ or a legal entity) who is not a VAT payer but has met one of the conditions set out in Sections 6g through 6i of Act No. 235/2004 Coll., on Value Added Tax.
Key difference: A VAT-identified person remits VAT on selected cross-border transactions but does NOT have the right to deduct input VAT. A VAT payer, by contrast, remits VAT on all taxable supplies and is entitled to deduct input VAT. A VAT-identified person is therefore in a less favourable position — they have an obligation to remit, but cannot deduct.
Why This Status Exists
The VAT-identified person status was created as part of VAT harmonisation across the EU. When a Czech non-VAT payer purchases a service from a foreign company, VAT must be accounted for somewhere. Without the identified person status, the tax would simply go uncollected — the foreign supplier doesn't remit VAT in the Czech Republic, and the Czech non-payer doesn't either. The IP status ensures that VAT on cross-border transactions is correctly collected in the country of consumption.
When You Become a VAT-Identified Person
The law defines several situations in which an OSVČ or a company that is not a VAT payer becomes a VAT-identified person. This is a mandatory registration — you cannot opt out of becoming an IP.
1. Purchasing a Service from the EU (Section 6h)
This is by far the most common reason. You become a VAT-identified person on the day you receive a service with the place of supply in the Czech Republic from a person not established in the country (a supplier from the EU or a third country), provided that service is subject to VAT.
Typical examples:
- Purchasing advertising on Google Ads or Meta (Facebook/Instagram)
- Subscribing to SaaS services (Adobe, Slack, Notion, Mailchimp)
- Hosting and cloud services (AWS, Azure, Google Cloud)
- Purchasing licences from a foreign company
- Using the services of a foreign graphic designer, developer, or translator
Note: You become a VAT-identified person on the day you receive the service, not on the date of payment or the date the invoice is issued. You are required to submit a registration application within 15 days of the date on which you became a VAT-identified person.
2. Acquiring Goods from the EU Above the Threshold (Section 6g)
You become a VAT-identified person if you acquire goods from another EU member state and the total value of goods acquired (excluding VAT) exceeds 326,000 CZK in the current calendar year.
Example: Purchasing goods from the EU
An OSVČ non-VAT payer purchases goods from Germany for resale:
| Month | EU Purchase | Cumulative | |---|---|---| | January | 50,000 CZK | 50,000 CZK | | February | 80,000 CZK | 130,000 CZK | | March | 60,000 CZK | 190,000 CZK | | April | 70,000 CZK | 260,000 CZK | | May | 90,000 CZK | 350,000 CZK — THRESHOLD EXCEEDED |
They become a VAT-identified person on the day of the acquisition in May that pushed the total above the 326,000 CZK threshold.
3. Supplying a Service to the EU (Section 6i)
You also become a VAT-identified person on the day you supply a service with the place of supply in another EU member state under Section 9(1) (the general B2B rule for services), where the obligation to account for VAT falls on the recipient.
Typical examples:
- Providing consulting services to a company in Germany
- Developing software for a client in Austria
- Graphic design work for a Slovak company
- Translation for a Polish business
Important exception: If you provide a service that is VAT-exempt in another EU member state, you do not become a VAT-identified person. In practice, however, this only applies to specific services (e.g. certain financial or insurance services).
4. Acquiring a New Means of Transport from the EU
If you acquire a new means of transport from another EU member state (a car, boat, or aircraft meeting the statutory criteria), you become a VAT-identified person regardless of any threshold.
Overview of Reasons for Acquiring IP Status
📊
| Reason | Legal Provision | Threshold | Date of Acquisition | |---|---|---|---| | Receiving a service from the EU/abroad | Section 6h | No threshold (from the first service) | Date of receiving the service | | Acquiring goods from the EU | Section 6g | Above 326,000 CZK/year | Date of acquiring goods that exceed the threshold | | Supplying a service to the EU | Section 6i | No threshold | Date of supplying the service | | Acquiring a new means of transport from the EU | Section 6g | No threshold | Date of acquisition | | Delivery of goods from the EU with installation/assembly | Section 6h | No threshold | Date of delivery |
Registering as a VAT-Identified Person
How to Register
📋
- Determine that you meet the condition — typically on the day you receive a foreign service or exceed the goods threshold
- Submit a registration application — using the "VAT Registration Application" form on the Tax Portal (EPO) of the Financial Administration, or via a data mailbox
- Deadline for submission — within 15 days of the date on which you became a VAT-identified person
- The tax authority will complete your registration — you will receive a VAT identification number in the format CZ + birth number (for individuals) or CZ + company registration number
- File your first return — for the tax period in which you became a VAT-identified person
Penalty for late registration: Failing to register on time exposes you to a fine for non-compliance with the registration obligation. However, your obligation to declare and pay VAT applies regardless of whether you have registered. Not registering does not exempt you from your tax liability.
What the Application Includes
In the application, you provide:
- Identification details (name, address, company registration number, birth number)
- Reason for registration (receiving a service from the EU, acquiring goods from the EU, supplying a service to the EU)
- The date on which you became a VAT-identified person
- Bank account number
Obligations of a VAT-Identified Person
1. Declare VAT on Selected Transactions
As a VAT-identified person, you are required to declare VAT when:
- Receiving a service from abroad — you declare Czech output VAT
- Acquiring goods from the EU — you declare Czech output VAT
- Acquiring a new means of transport from the EU
2. File VAT Returns
You only file a return for the tax periods in which you have carried out a transaction that gives rise to a VAT obligation. If you have no such transactions in a given month, you do not need to file a return.
Tax period: A VAT-identified person always has a calendar month as their tax period. The return must be filed by the 25th day of the month following the tax period. Returns must be filed electronically only (via a data mailbox or through EPO).
3. Recapitulative Statement
If you supply services to persons registered for VAT in other EU member states (under Section 9(1)), you must submit a recapitulative statement. The statement is filed for the calendar quarter in which you supplied the service, by the 25th day of the month following that quarter.
4. Invoicing
When supplying a service to the EU, your invoice must include your VAT identification number and the recipient's VAT number. You invoice without VAT, with a note that the tax is to be accounted for by the recipient.
What a VAT-Identified Person Does NOT Have to Do
- Does not have to charge VAT on domestic sales (you continue selling without VAT as a non-payer)
- Does not have to submit a control statement
- Does not have to maintain full VAT records
VAT-Identified Person vs. VAT Payer
This comparison is key to understanding both statuses:
📊
| Parameter | VAT-Identified Person | VAT Payer | |---|---|---| | Right to deduct input VAT | NO | YES | | VAT on domestic sales | NO (invoices without VAT) | YES (invoices with VAT) | | VAT on services received from abroad | YES (declares and pays) | YES (declares and deducts) | | VAT return | Only when a relevant transaction occurs | Every month/quarter | | Control statement | NO | YES | | Recapitulative statement | YES (for services to the EU) | YES (for supplies to the EU) | | Turnover threshold | None (depends on the type of transaction) | 2,000,000 CZK / 2,536,500 CZK | | Administrative burden | Lower | Higher | | Impact on domestic prices | None | Prices increase by VAT |
The biggest disadvantage of IP status: When you, as a VAT-identified person, purchase a service from the EU (e.g. Google Ads for 10,000 CZK), you must declare and pay 2,100 CZK in VAT (21%). You CANNOT deduct this VAT. In practice, the foreign service actually costs you 12,100 CZK. A VAT payer, by contrast, would declare the output VAT and simultaneously deduct the input VAT — resulting in a net cost of 0 CZK.
Practical Impact on Your Business
Example: A Freelancer Using Foreign Services
Profile: Graphic designer, OSVČ non-VAT payer, annual revenue 600,000 CZK
Monthly foreign services:
| Service | Cost/month | Annual VAT (21%) | |---|---|---| | Adobe Creative Cloud | 1,500 CZK | 3,780 CZK | | Figma | 400 CZK | 1,008 CZK | | Google Workspace | 300 CZK | 756 CZK | | Hosting (foreign) | 200 CZK | 504 CZK | | Stock photos | 800 CZK | 2,016 CZK | | Total | 3,200 CZK/month | 8,064 CZK/year |
As a VAT-identified person, they must remit 8,064 CZK in VAT annually with no right to deduct.
If they registered as a VAT payer, they would declare and deduct the VAT (net result: 0 CZK), but would need to charge VAT on domestic sales and maintain full VAT records.
When It Makes More Sense to Become a VAT Payer Straight Away
In some situations, it may be more advantageous to skip the VAT-identified person status and register directly as a voluntary VAT payer:
Registering as a VAT payer is worth it if:
- Your foreign services cost more than approximately 5,000 CZK per month
- Most of your domestic customers are VAT payers (B2B)
- You have significant input costs from domestic VAT payers
- You want to deduct VAT on equipment (laptop, car)
VAT-identified person status is sufficient if:
- You only use foreign services occasionally
- Most of your customers are end consumers (B2C)
- You want to keep your administrative burden low
- You are in the flat-rate tax regime (VAT payers cannot use the flat-rate regime)
Decision-making tip: Calculate the annual VAT you would pay as a VAT-identified person with no right to deduct. If this amount significantly exceeds the administrative costs of being a VAT payer (approximately 15,000–25,000 CZK per year), consider voluntary registration as a VAT payer.
How to Correctly Declare VAT as a VAT-Identified Person
Receiving a Service from Abroad
📋
- You receive an invoice from a foreign supplier (without VAT — the supplier invoices without tax because the place of supply is in the Czech Republic)
- Determine the VAT rate — most services fall under the standard rate of 21%
- Calculate the VAT — tax base (amount on the invoice) × VAT rate
- If the invoice is in a foreign currency — convert using the Czech National Bank exchange rate as of the date the taxable supply was made
- File your VAT return — by the 25th day of the month following the month in which the supply occurred
- Pay the VAT — to the tax authority's account by the same deadline
Practical Example of a VAT Return
Situation: In March 2026, you received the following foreign services as a VAT-identified person:
| Service | Supplier | Amount | VAT Rate | VAT Due | |---|---|---|---|---| | Google Ads | Google Ireland Ltd. | 15,000 CZK | 21% | 3,150 CZK | | Adobe CC | Adobe Systems Ireland | 1,500 CZK | 21% | 315 CZK | | AWS hosting | Amazon EU S.à r.l. | 2,000 CZK | 21% | 420 CZK | | Total | | 18,500 CZK | | 3,885 CZK |
The VAT return for March 2026 must be filed by 25 April 2026. VAT of 3,885 CZK must be paid to the tax authority's account by 25 April 2026.
Supplying a Service to the EU
If, as a VAT-identified person, you provide services to businesses in the EU:
- You invoice without VAT with the note "Reverse charge — VAT to be accounted for by the recipient"
- Your invoice must include your VAT number and the recipient's VAT number
- You submit a recapitulative statement for the quarter in which you provided the service
- In your VAT return, you report the service on the relevant line as a supply with a place of supply outside the country
Cancelling VAT-Identified Person Registration
You can cancel your VAT-identified person registration if:
- You have not acquired goods from the EU above the threshold for 6 consecutive months
- You have not received a service from abroad
- You have not supplied a service to the EU
- You have not carried out any other transaction that gives rise to IP status
You apply for cancellation using the "Request for Cancellation of Registration" form. The tax authority will cancel the registration if it determines that the conditions for cancellation are met.
In practice: Cancelling IP status is a realistic option mainly for those who became an IP on a one-off basis (e.g. a single purchase from abroad). If you regularly use foreign online services, your IP status will remain permanent.
VAT-Identified Person and the Flat-Rate Tax Regime
An important note for OSVČ in the flat-rate tax regime: a VAT-identified person can remain in the flat-rate regime (unlike a VAT payer, who cannot). However, this creates a complication — you must file a VAT return for any period in which you receive a foreign service, even though you otherwise file no tax returns at all.
Watch out with the flat-rate regime: If you are in the flat-rate regime and become a VAT-identified person, you do not lose your flat-rate status. However, in addition to the flat-rate tax, you must also file VAT returns and remit VAT on foreign services received. This increases your administrative workload, even though you remain in the flat-rate regime.
The Most Common Mistakes Made by VAT-Identified Persons
1. Not realising they've become an IP
Many OSVČ don't realise that purchasing a foreign service (e.g. Google Ads, Adobe) automatically makes them a VAT-identified person, triggering a registration obligation and a duty to remit VAT.
2. Failing to register on time
You must submit your application within 15 days of becoming an IP. Late registration results in a fine.
3. Not filing VAT returns
Even as an IP, you are required to file a return for any period in which you have received a foreign service or acquired goods from the EU.
4. Not remitting VAT
You must actively remit VAT on foreign services received to the tax authority. This is not an automatic process.
5. Assuming they can deduct VAT
A VAT-identified person does NOT have the right to deduct input VAT. This is a fundamental difference compared to a VAT payer.
6. Not verifying the foreign partner's VAT number
When supplying services to the EU, you should verify your customer's VAT ID in the VIES (VAT Information Exchange System) to confirm they are registered for VAT in another member state.
Frequently Asked Questions
Do I need to register as an IP because of a single foreign invoice?
Yes. If you receive even a single service from a foreign supplier with the place of supply in the Czech Republic, you become a VAT-identified person as of the date you receive that service. The registration obligation and the duty to remit VAT apply even for a one-off transaction.
Does this apply to purchases on Amazon or AliExpress?
For physical goods from the EU, it depends on whether you exceed the 326,000 CZK annual threshold. For services (e.g. cloud services, digital content), you become an IP immediately. Goods from third countries (China) are treated as imports, not EU acquisitions, and different rules apply.
What if the foreign supplier charges VAT from their own country?
If an EU supplier incorrectly charges you their domestic VAT (e.g. German VAT), you should ask them to correct the invoice. As a business (B2B), you should receive an invoice without VAT. Even so, you are still required to declare Czech VAT in the Czech Republic as a VAT-identified person.
Can I be both an IP and a VAT payer at the same time?
No. If you become a VAT payer, your VAT-identified person status automatically ceases. A VAT payer has broader obligations, but also the right to deduct input VAT.
How does an IP differ from a non-payer?
A non-VAT payer has no VAT obligations whatsoever. A VAT-identified person is still a non-payer from the perspective of domestic transactions (they don't charge VAT on their invoices), but they are required to declare and remit VAT on selected cross-border transactions.
Do I have to file a control statement as an IP?
No. Control statements are only required from VAT payers, not from VAT-identified persons.
Moving from VAT-Identified Person to VAT Payer
If you find that IP status is working against you (you're paying VAT with no right to deduct), you can voluntarily register as a VAT payer at any time:
📋
- Weigh the benefits and costs — calculate how much VAT you pay annually as an IP versus the administrative costs of being a VAT payer
- Submit a registration application as a VAT payer — standard form available on the Tax Portal
- The tax authority will register you as a VAT payer — your IP status will automatically cease
- Start invoicing with VAT — you charge VAT on domestic sales
- Claim deductions — VAT on foreign services is both declared and deducted
Conclusion: Being a VAT-Identified Person Is an Obligation, Not a Choice
VAT-identified person status is a statutory obligation that arises automatically when the legal conditions are met. You cannot decide to opt out — if you purchase a foreign service as an OSVČ non-VAT payer, you become an IP by operation of law.
Key principles:
- Keep track of your foreign purchases — every service from abroad makes you an IP
- Register on time — within 15 days of the obligation arising
- File returns and pay VAT for any period involving cross-border transactions
- Consider whether becoming a VAT payer might be more advantageous
- As an IP, you have no right to deduct — treat VAT as a real cost
Not sure whether you're a VAT-identified person or a VAT payer? DokladBot can help you analyse your foreign invoices and alert you to any VAT declaration obligations. Simply send a document via WhatsApp and the AI assistant will tell you exactly how much VAT you need to remit. Try DokladBot and stay on top of your VAT obligations without having to wade through legislation.
Useful Links to Official Sources
- VAT Registration — Public Administration Portal
- Tax News for 2026 — Financial Administration
- Right to Deduct Input VAT — Financial Administration
- News for 2026 — Financial Administration
Disclaimer: This article is intended for informational purposes only and does not constitute tax advice. Legislation is subject to change. For guidance on your specific situation, we recommend consulting a tax advisor or your local tax authority. Information is current as of February 2026.
Nechcete ztrácet čas s papírováním?
Vyzkoušejte DokladBot - účetnictví přes WhatsApp. První týden zdarma.
Related articles
10 Most Common Mistakes in the OSVČ Tax Return
Every year, thousands of self-employed individuals make the same mistakes in their tax returns — wrong form, missing attachments, or incorrect calculations. Go through the 10 most common mistakes and find out how to avoid them.
Airbnb and Short-Term Rental: How to Tax Your Income
Are you renting out your flat through Airbnb or Booking? Find out how to correctly tax your short-term rental income, when you need a trade licence, and what obligations await you in 2026.
All Tax Deductions for the Self-Employed in One Place – 2026 Overview
An overview of all tax credits and non-taxable portions of the tax base that self-employed individuals can claim on their 2025 tax return. Including abolished credits and practical examples.