How to properly issue an invoice in the Czech Republic?

An invoice (daňový / účetní doklad / faktura) is a document that is used to submit a request for payment for services or goods. In the Czech Republic, there is no specific law that regulates the rules for its preparation, the law points out only the mandatory data that has to be included in the invoice.

The invoice is issued at the time the service is performed or shipment of goods, i.e. it replaces for us the usual Certificate of Completion and the consignment note (Bill of Lading).

A proforma invoice (zálohová faktura) is an advance invoice as a prepayment. In case you need to issue an invoice for a prepayment, do not use an invoice (daňový / účetní doklad / faktura) for these purposes, because the actual moment for provision of service or sale of goods has not yet taken place. For the purpose of receiving an advance payment, a proforma invoice document is used, which is not a tax document and is not posted (recorded) in the accounting/bookkeeping records. If a client has not paid it, there is no need to reverse/credit this document (proforma invoice/ zálohová faktura).

Entrepreneurs can be divided into 3 groups:

• non-payer of VAT, accounting is not carried out
• non-payer of VAT, accounting is carried out
• VAT payer and Identified VAT person (identifikovaná osoba)

Each group has its own rules for information contained in an invoice.

The following are requirements for the invoice parameters for each group of entrepreneurs.

Non-payer of VAT, no accounting is carried out

If you are an individual entrepreneur (OSVČ), the invoice has to be issued in accordance with the Civil Code № 89/2012 Sb., občanský zákoník (§ 435).

The invoice should contain:

• Name of your company (legal entity, such as s.r.o., etc.)
• Your first name and last name (for a natural person = OSVČ)
• Legal address of your company (sídlo) or your residence address
• Your registration number (such as, IČ)
• Register name where you are recorded (such as, obchodní rejstřík, živnostenský rejstřík, etc.)

Although the law does not oblige the following information to be included in the invoice, it is advisable to include it in each issued document:

• information about a buyer (company name, first and last name, legal address, registration ID number)
• product description, price and quantity
• date of issuance of invoice and due date of payment
• document name (such as «faktura») and invoice number
• statement that you are not a VAT payer (neplátce DPH)
• exchange rate in case of issuing in foreign currency

Non-payer of VAT, accounting is carried out

If you are not a VAT payer, but at the same time keeping accounting records (companies and individual entrepreneurs that voluntarily keep accounting records), then the issued by you invoice is an accounting document (účetní doklad) and the rules for its preparation are determined by the Law on Accountancy № 563/1991 Sb., o účetnictví. (§ 11).

Invoice should contain:

1. Information about You:

1. Name of your company (legal entity, such as s.r.o., etc.)
2. Your first name and last name (for a natural person = OSVČ)
3. Legal address of your company (sídlo) or your residence address
4. Your registration number (such as, IČ)
5. Statement that you are not a VAT payer (neplátce DPH)
6. Register name where you are recorded (such as, obchodní rejstřík, živnostenský rejstřík, etc.) with indication of section and index number
7. Information about a Buyer:

1. Name of Buyer-company (legal entity, such as s.r.o., etc.)
2. Buyer’s first and last name (for a natural person = OSVČ)
3. Legal address of Buyer-company (sídlo) or a Buyer’s residence address where the invoice is being sent to
4. Buyer’s registration ID number (IČ/DIČ) or his/her date of birth
5. Information about services/products:

1. Description of a provided service / product
2. Price for service / product provided
3. Quantity
4. Currency exchange rate in case of being issued in foreign currency
5. Other:

1. Document name (such as «Faktura»)
2. Invoice number
3. Date of issuing/invoicing 
4. Date when the service / sale of goods is provided
5. Client’s signature (not Seller’s) and signature of accountant who will record this document in the accounting books. 

VAT payer or Identified VAT person (identifikovaná osoba)

In the case of a VAT payer or an Identified Person to VAT, an issued invoice is a tax document (daňový doklad), and its content is established by the VAT Law №235/2004, o dani z přidané hodnoty. (§ 29).

The invoice should contain: 

1. Information about You:
   1. Name of your company (legal entity, such as s.r.o., etc.)
   1. Your first name and last name (for a natural person or OSVČ)
   1. Legal address of your company (sídlo) or your residence address
   1. Your registration number (such as, IČ) and DIČ
   1. Register name where your company is recorded (such as, obchodní rejstřík, živnostenský rejstřík, etc.) with indication of section and index number
2. Information about a Buyer:
   1. Name of a Buyer-company (legal entity, such as s.r.o., etc.)
   1. Buyer’s first and last name (for an OSVČ or natural person)
   1. Legal address of Buyer-company (sídlo) or a Buyer’s residence address where the invoice is being sent to (= fakturační adresa)
   1. Buyer’s registration ID number (IČ)
   1. DIČ number, if a Buyer is a VAT Payer company / OSVČ
3. Information about services/products:
   1. Description of provided service / sold goods
   1. Quantity
   1. Currency exchange rate in case of being issued in foreign currency
   1. The price of a single unit for service / product (excluding VAT amount)
   1. Subtotal amount (excluding VAT), VAT rate, VAT amount and total
4. Other:
   1. Document name (such as «Faktura — daňový doklad»)
   1. Invoice number
   1. Tax document number (it may differ from the invoice number, but as a rule it is the same number as the invoice no.)
   1. Date of issuing/invoicing 
   1. Date of VAT obligation (DZUP), as a rule, this is the date when service is provided / goods are sold
   1. See below the “mandatory wording/comments”
   1. Client’s signature (not Seller’s) and signature of an accountant who will record this document in the accounting books. 

Issuing invoices to foreign companies / persons

In the case of invoicing outside the Czech Republic, the following points should be taken into account:

1. The bank account number is displayed in the international IBAN format
2. The bank code is displayed in the international SWIFT (BIC) format 
3. Indicate the currency and the exchange rate (the exchange rate of the National Bank or the internal currency exchange fixed rate). For non-payers of VAT, the exchange rate applied on the day of invoicing, and for VAT payers: on a transaction day (DZUP)
4. VAT amount should be indicated, including in the national currency
5. It is necessary to indicate in which VAT mode the service is provided / product is sold (see “mandatory wording” below).

Mandatory wording when selling outside the Czech Republic:

• «reverse-charge» — in the case of B2B services’ sale outside the Czech Republic (to firms or individual entrepreneurs from the European Union or outside the EU countries) VAT liability is in the mode of transferring VAT obligation to the Buyer of a service, write on the invoice the phrase: 
  • CZ «Faktura je v režimu přenesené daňové povinnosti. Daň odvede zákazník.» 
  • EN «Invoice in Reverse charge mode. The buyer is obligated to fill in the VAT amounts and pay the tax.» 
• «Dodání osvobození od daně» — in case of invoicing to another EU country without adding VAT on goods:

— CZ «Osvobozeno od daně podle zákona o DPH č. 235/2004.» 

— EN «Tax exemption according to VAT Law no. 235/2004.»

Mandatory wording when selling within the Czech Republic:

• „ Zvláštní režim podle § 89 ZDPH “ — for travel/tourism service providers, for so-called travel/tourism service intermediaries (only markup on the product is subject to VAT)
• „ Zvláštní režim podle § 90 ZDPH “ — for sellers of used goods, works of art, collectibles and antiques (only markup on the product is subject to VAT)
• „ Přenesení DPH podle § 92a zákona o DPH “ – transfer of responsibility for VAT within the Czech Republic between two VAT payers in case of: 

— sale of gold (§ 92b)

— sale of goods specified in Appendix 5 of the VAT Law (waste and scrap) (§ 92с)

— sale of real estate subject to certain conditions (§ 92d)

— sales of construction and installation work (§ 92e)

— other cases (§ 92ea).