New tax obligations for non-EU entities in the Czech Republic

A new and upcoming amendment of the Czech VAT Act will very likely come into effect from 1 January 2025 in the Czech Republic ("CZ"). This amendment will, among other things, include two new significant obligations for businesses which were established outside the European Union and are registered/identified for VAT purposes in CZ. The new obligations are as follows:

1. Appoint an agent for communication with the Czech tax authorities.
   A non-resident entity established outside the EU will be required to appoint an agent for communicating with the Czech tax authorities ("agent"). The Czech tax authorities require a specific channel for communication, so by law the agent can only be an entity that is legally obligated to have a data mailbox. Non-resident companies that have already set up their own data mailboxes will not have to appoint an agent.
2. Notify the Czech tax authorities of an email address.
   A non-resident entity established outside the EU will also be required to announce an email address for electronic communication with the Czech tax authorities. This must be done by submitting the official form for a change of registration details.

The deadline for both obligations is the end of February 2025. 

1. The agent has to be appointed in CZ and announced to the Czech tax authorities by providing a special power of attorney. This can be done at any time between now and the end of February 2025 (unless the entity has already appointed an agent).
2. The email address for electronic communication has to be announced to the Czech tax authorities by submitting the form for a change of registration details. This can be done between 1 January 2025 and the end of February 2025.

If an entity fails to fulfil one or both of the obligations, penalties will apply. 

1. A penalty of CZK 1,000 (approx. EUR 40 / USD 44) per day will be imposed if the agent has not been appointed, starting from 1 March 2025.
2. A penalty of up to CZK 500,000 (approx. EUR 19,750 / USD 21,590) may be imposed for failing to announce the email address by 28 February 2025.

We are ready to assist with both obligations. We provide the agent service for our clients based on a power of attorney. The agent service includes forwarding enquiries which the Czech tax authorities have delivered to the PwC CZ data mailbox addressed to the client with a brief English summary of the content of the received document (all communication received from the Czech tax authorities is in Czech). We can also help announce the email address for electronic communication to the tax authorities by submitting the form for a change of registration details, again based on a power of attorney.

For the agent service, we charge EUR 1,300 / USD 1,420 per calendar year.

For submitting the form for a change of registration details to announce the email address, we offer a one-off fee of EUR 900 / USD 985.

We strongly recommend getting ready for the upcoming obligations well in advance to avoid incurring any penalties. 

If you are interested in our assistance or need any consultation on this issue, please contact our experts Michaela Vrana or Sarka Horvathova from PwC Czech Republic.