How to register for VAT voluntarily?
Paying taxes pleases few. Not only are you obliged to pay part of the money you earn to the state, but you don't miss out on the paperwork and possible checks. So you may wonder why anyone would volunteer to pay any tax. In the case of VAT, the answer is obvious - for many companies it pays. Are you one of them? And how do you voluntarily register for VAT?
What is voluntary registration for VAT?
In our article on VAT registration , we explained that businesses are obliged to register for VAT if their turnover in the last 12 months exceeds CZK 1,000,000. Both legal and natural persons (i.e. companies and self-employed persons) can become VAT payers. It is also possible to register for VAT voluntarily, even if you do not meet the turnover requirement.
However, there is one catch - the registration must be authorised by the tax authorities. No one can guarantee that you will actually become a VAT payer after submitting the relevant forms and documents. However, you will significantly increase your chances by providing good documentation and additional information regarding your business activities.
TIP: For voluntary registration, it is important to provide the supplies associated with the right to deduct tax (this condition is not met, for example, by various financial services.
Why become a VAT payer?
To start with, as a VAT payer you can claim input tax deductions. In simple terms, this means that you deduct the input tax (which you have paid to your suppliers) from the output tax, i.e. the tax collected from your customers. There are, of course, a number of exceptions to this model. You then only pay the difference between these two amounts to the state, which you calculate on your tax return.
Paying VAT is particularly useful if you trade with other VAT payers or if your outputs are subject to a lower VAT rate than your inputs. In addition, your business will rise in the eyes of your customers, especially those abroad. Your goods will be cheaper for them compared to non-taxable suppliers.
TIP: You can also read about the pitfalls of paying VAT and who is most likely to find it unprofitable.
How to register for VAT?
You can register via the registration form on the tax administration's website (Registration section, VAT registration form). All communication with the tax office is then done online via the data box.
You will fill in the following information, among other things:
- Identification details (self-employed or company),
- registered office,
- bank account numbers,
- expected annual turnover (or last annual turnover),
- reason for voluntary registration.
Unlike the compulsory VAT registration, you can register voluntarily at any time. The tax authorities have 30 days to comment. However, this period may be extended if the authorities ask you for further details. If they approve your application, you will become liable for VAT the day after the decision is notified.
How can I improve my chances of successful registration?
In order to support the approval of your voluntary registration, we recommend that you also prepare additional documents about your business. The tax authorities often ask for additional information to convince them of the legitimacy of your business.
The requirements of the tax administration vary, for example, depending on how long your business has been operating. For companies with a longer history, the officials are interested in various documents and contracts, while new companies often have to supplement the information from their business plan.
The most common details are:
- the actual registered office and business premises,
- the technical and personnel support of your business,
- your accounting, financing and economic situation,
- your company's marketing activities,
- suppliers and customers.
We therefore recommend that you attach relevant contracts, for example with suppliers or employees, to your application. Lease agreements, a statement from the Land Registry or your bank account may also be useful. Attaching documentation will speed up the process.
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