Czech Republic plans new reduced VAT rate
The Czech Republic plans to introduce a second, reduced VAT rate of 10% on key products. The current Czech VAT rate is 21%, and the only reduced VAT rate is 15%
Lower VAT on books and medicines
The coalition government has discussed many reforms of the Czech VAT rates, including a plan to merge the 21% and 15% rates at 17.5%. However, it is clear there is limited room for manoeuvrings on the budget as the economy recovers slowly than hoped. The government did hold out the hope of a 1% cut in the standard rate to 20% in 2016 following the Czech VAT rise to 21% in 2013.
As a compromise, the parties favour introducing a new reduced rate of 10% on books and medicines. The EU VAT Directive does permit two reduced rates, the lower of which must be 5% or above. The probable implementation date will be 2015 subject to the country making progress towards the Euro currency 3% GDP deficit target.