Czech Republic: VAT in the Digital Age (ViDA) and E-Invoicing Requirements

Goal of ViDA 

The primary goal of the ViDA package is to reduce the annual VAT fraud gap but also to modernize the VAT system to match the digital economy. Once ViDA is implemented, transactions will have to be reported practically immediately to the tax authorities and have to be followed by an e-invoice issued within 10 days in a form compliant with EN 16931 standards. Data will be shared in VIES Central and then analysed using artificial intelligence tools. The new DRR aims to identify methodological and procedural shortcomings for which it is advisable to get ready.

Although ViDA requirements under the EU VAT legislation are mandatory only for intra-Community supplies, Member States have the right to require them for other types of transactions as well, which will likely be the case of most of Member States in the end. 

Stage of implementation of ViDA in the Czech Republic 

The Czech Republic has not yet started implementing ViDA on the subject of e-invoicing and DRR. A working group composed of representatives from the Ministry of Finance of the Czech Republic and the General Financial Directorate of the Czech Republic is currently discussing DRR technical solutions adopted in other Member States. It is assumed that e-invoicing and DRR requirements will be applicable for all kinds of transactions even though this information has not yet been confirmed. 

In light of the above, it is expected that the ViDA rules regarding e-invoicing and DRR will be implemented no earlier than in 2029. 

Current situation in the Czech Republic (before ViDA is implemented) 

Reporting in the Czech Republic 

All businesses involved in taxable transactions are required to submit a VAT Control Statement in a prescribed XML structure alongside the VAT return. The VAT Control Statement is a mandatory electronic report which includes all taxable inputs and outputs to detect tax evasion. 

E-invoicing in the Czech Republic 

Following Czech VAT legislation, the use of e‑invoicing must be approved by the recipient of the invoice. The form of approval is not defined by the Czech VAT Act. Approval can have any form and includes also tacit agreement (e.g. the customer includes the VAT invoice into its bookkeeping). 

At the moment the Czech Republic does not limit the format of electronic invoices and hence all standard formats are generally accepted, i.e. pdf, xls or even email including all legal essentials would be accepted as the VAT invoice. 

Archiving in the Czech Republic 

The Czech Republic generally does not establish any rules regarding the format in which VAT invoices must be archived. For instance, the Czech Republic does not require that VAT invoices be stored in its original form (e.g. business can scan all invoices received on paper and then archive them electronically). 

For the duration of the requirement to archive VAT invoices – that is generally 10 years – it is necessary to ensure the authenticity of the VAT invoices’ origin, the integrity of their content, and their legibility.