The legal part of your business activities can be a hustle many times. Dealing with local authorities, customers, suppliers, finding a reliable accountant are important factors but could be tricky to manage. In order to keep your accounting according to true and fair view (the main accounting principle) the information on your invoices should meet legal requirements. Keep reading to find out what your invoices should include depending on whether you’re a VAT or non-VAT payer in the Czech Republic.
The sections below include detailed information on what to include in your invoices depending on your status. We recommend you check them out to make sure you’re not making any mistakes.
However, we know that all that information might be slightly overwhelming. Accounting can sometimes be a true headache. But to make your life easier – and as a small gift for reading this article – you can download an invoice template for each of the following situations:
- Invoice for a CZ client (non-VAT payer)
- Invoice for a CZ client (VAT payer)
- Invoice for a EU client
- Invoice for a non-EU client
Invoicing Businesses Registered in the Czech Republic
If you meet the requirements to be a non-VAT payer (you can find more information here), then invoicing your clients is pretty easy. However, if you are required to register for VAT, your invoice must include a few more items.
If you’re a NON-VAT payer, these are the requirements for your invoice according to the Czech VAT law:
- identification of issuing party
- identification of receiving party
- document ID
- payment condition
Although freelancers in the Czech Republic are often not VAT payers, here you’ll find the requirements for your invoice according to the Czech VAT law:
- the designation of the person performing the services (business name or name, the addendum to the name and the seat)
- the tax identification number of the person performing the transaction
- the name of the person to whom the supply is performed
- the tax identification number of the person to whom the supply is made
- the registration number of the tax document, scope and subject matter of performance
- the date of issue of the tax document
- the date of performance of the service/supply or the date of receipt of the payment if, prior to the performance of the transaction, an obligation arises on the date of receipt of the consideration to grant the tax or to recognize the transaction if it differs from the date of issue of the tax document
- the unit price, exclusive of tax and discount, if not included in the unit price
- the tax base
- the rate of tax
- the amount of the tax; this tax is given in the Czech currency
The tax document (invoice) MUST also contain the following information:
- a reference to the relevant provisions of this Act, a provision of the European Union Code or another indication stating that the benefit is exempt from tax if the transaction is exempt
- “issued by a customer” where the person for whom the performance is performed is authorized to issue a tax document, “tax to be paid by a customer” where the person to whom the supply is made is the person liable to pay the tax.
The tax document MAY NOT contain the following information:
- the tax identification number of the person to whom the performance is effected, if it is not assigned/issued,
- the unit price, exclusive of tax and discount, if it is not included in the unit price, where the obligation to tax or to grant performance on the date of receipt of the payment is due,
- the rate of tax and the amount of tax,
1) in the case of exempt transactions, or
2) if the person responsible for the tax is the person for whom the performance is performed.
In case the billing isn’t in CZK, for VAT calculation you need to use the Czech National Bank exchange rate valid as of Tax Point Date, despite the fact you might use different FX rate in your accounting. Amount of VAT in CZK needs to be stated on the invoice. It is not necessary to print FX rate use for the conversion, but it is quite common to do so. For more information check the web page of Czech National bank.
Invoicing Businesses Registered in the EU
If your clients are based in the European Union, but outside the Czech Republic, EU reverse charges may apply. This means that you can charge your clients without VAT, and they can provide payment without VAT. However, your invoice must include a note that makes it clear that EU reverse VAT charges apply.
Invoicing Businesses Outside of the EU
When invoicing clients outside of the EU, VAT doesn’t apply. Your invoice must include the following note: “Non-EU: VAT exempted”.
Hope it helps!