Dear readers,
An Update of the General Financial Directorate on tax consideration of obligations of UBER, Bolt, Liftago, etc., transport service providers was published on the Financial Administration’s website. The Update fully replaces the Information of 2017 and responds to the legislative development in the area of VAT, individual income tax and road tax.
Please find below a summary of tax obligations that you as providers of this type of a service should pay attention to.
Value Added Tax
If you provide transport services in the Czech Republic (and you are seated in the Czech Republic), you are a taxable person in compliance with the Act on VAT and, as a result, you are obliged to track your turnover for the purposes of VAT registration (among other things).
In case your turnover exceeded the amount of CZK 2,000,000 (for previous 12 successive calendar months), you have to file a registration application within 15 days from the date of the excess. You become a VAT payer as of the first date of the second month following the month when the turnover’s threshold was exceeded. For example, if you exceed the turnover in February 2023, you become a VAT payer from 1 April 2023. As a VAT payer, you are then obliged to declare performances in tax returns.
Until then, before you become a VAT payer, you should bear in mind that if you for example receive a service for the access to a transport service application from a company established in the EU / outside the EU, you become the identified person as of the date of accepting such service. This means that you have to locally pay VAT on such service, as well as on any other services accepted subsequently. However, you remain a “VAT nonpayer” for the purposes of local performances in such situation, and you have to continue to monitor your turnover for the VAT registration purposes as a VAT payer. The identified person is not entitled to a tax deduction from received taxable supplies.
Please bear in your mind that the VAT impacts may differ in case you are not seated in the Czech Republic.
Individual Income Tax
Income from transport services constitutes your income from independent activities pursuant to Section 7 of the Income Tax Act irrespective of whether you have a trade licence or not (even if such obligation applies to you).
In such case, you can keep your accounting records and a tax register (to apply proven expenses) or apply expenses as a percentage of income (60% of income (a maximum of CZK 1,200,000) for a trade; 40% (a maximum of CZK 800,000) without a trade). Where all defined conditions are met, there also is an option to apply for the lump-sum tax regime.
The moment you commence performing such activity (or accept income from an independent activity, as the case may be), you are obliged to file a registration application within 15 days from that date.
After the end of the taxation period (calendar year) you are obliged to file a return within the following deadlines:
Road Tax
No obligations have newly applied to passenger transport service providers in relation to road tax since 2022 (this applies to passenger vehicles and trailers).
Where the definition of the dependent activity has been met, i.e. you provide the transport services as an employee of a transport service provider, the information mentioned above does not apply to you and such income is taxed in a special regime.
If you want more information about this topic or need advice in preparing a tax return, please feel free to contact us. We are ready to help you.
Michaela Kozminská
kozminska@edmutilitas.cz