Czech Republic exempts books from VAT with the right to deduct from 1 January 2024

What changed in detail

Act No. 349/2023 Sb., published on 12 December 2023, abolished the Czech 10% second reduced VAT rate from 1 January 2024. Books, which had been taxed at that rate, did not move to the new 12% rate. Instead the Act inserted § 71i into the VAT Act, which exempts the supply of books from VAT with the right to deduct input tax. Legally this is an exemption, not a 0% rate, though it has the same economic effect.

According to the GFŘ’s Information on VAT rate changes from 1 January 2024, section 4, the exemption covers:

• printed books and other printed matter;
• services defined in § 71i(2) as similar to the supply of books, typically e-books for download, sent by e-mail or made available for online reading, including lending and rental.

The GFŘ also states:

• The exemption extends to incidental costs under § 36(4), mainly packaging and transport.
• It applies under the special margin scheme of § 90.
• Exempt supplies are reported on line 26 of the VAT return.
• Under § 71i(3), the exemptions in § 51, § 64, § 66 and § 71h take precedence, and so does § 61, so those supplies stay exempt without the right to deduct.

Newspapers and periodicals were not moved into § 71i. They take the single 12% reduced rate.

What it means

The § 71i exemption is still in force. A bookseller charges no VAT but keeps its input-tax deduction. Because the supply is an exemption rather than a rate, it is reported as an exempt supply with the right to deduct, on line 26 of the return. A system set up with a “0%” rate for books should be checked against that.

For the rest of the rate reform, see the consolidation into a single 12% rate.