Czech approves new 10% reduced VAT rate

Mon 7th Jul 2014

The Czech government has approved a new, second reduced VAT rate of 10% from 1 January 2015.

The new rate will be applied on: medicines, pharmaceuticals, books and baby foodstuffs.  The Czech 10% VAT rate was proposed in April 2014, and was by the government last week and is now with Parliament for last stage approval.  The new rate, moving key goods to the lower rate, will costs the state Czech Krones 3 billion.

Under the EU VAT Directive, member states are permitted two reduced VAT rates.  The other current Czech VAT rate is 15%.  Czech VAT rose to 21% in 2013 as the country struggled to control is government deficit. There was a Czech VAT rate simplification proposal in 2013 to combine the standard rate of 21% with the reduced 15% rate at 17.5%.  However, this was put aside due to the complications of managing government and company accounting systems.  The plan to implement this new rate had been planned fro 2016.