Czech Republic Updates VAT Deduction Rules for Unpaid Debts Effective January 2025

VAT payers in the Czech Republic must reduce VAT deductions for unpaid taxable supplies if payment is overdue by six months.
The General Financial Directorate issued guidance in July 2025 on adjusting VAT deductions for bad debts.
The guidance applies to cases from 1 January 2025 onwards.
If a debt is later paid, the deduction can be reclaimed, even if the receivable is assigned.
The due date for VAT purposes is based on contracts, terms, and legislation.
For debts with split payments, the six-month period is assessed separately for each part.
Records of overdue payables and their components should be maintained.
Changes in deduction rights for overdue payables must be reported in specific lines of the VAT return form.
Quarterly VAT payers are exempt from reducing deductions if they pay by the end of the taxable period.
The obligation to reduce deductions does not apply to reverse charge supplies or offsetting mutual receivables.
Deductions must be reduced even if the payable is unpaid due to complaint proceedings.

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.