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VAT rates changes in the Czech Republic from 1 May 2020

From 1 May 2020 an amendment to the Czech VAT Act will take effect. It changes VAT rates of certain supplies. In CZ there are three VAT rates, standard rate of 21%, first reduced rate of 15% and second reduced rate of 10%. After the 1 May, supplies of drinking water and draining of sewage water, catering services, cleaning, care for elderly people and kids and others will be subject to 10% VAT rate.

Czech Financial Administration issued the information to this topic:

Source: financnisprava.cz

10% rate will apply to the draught beer as well, if consumed in the restaurant. This may be a bit complicated for the sellers, as draught alcoholic and nonalcoholic beer consumed in the pub will be subject to 10% VAT, the same beer sold at the stand (considered as sale of food) will be subject to 21% VAT whilst non alcoholic beer to 15% VAT. Now what happens if someone buys beer into his own jug to take it away, but drinks one beer in the pub in between??

One member of the opposition advises a new profession of a beer tax advisor will be necessary.

Contribution by Ondřej Štědrý
Tax Adviser
Prague
Czech Republic