Reduced VAT rate comes into effect as of January 1

02-01-2015

As of January 1st, Czechs should save money on books, baby food and medicines which are now subject to a lower 10 percent value added tax.

Photo: Kristýna MakováPhoto: Kristýna Maková Until the end of last year, books, baby food and drugs were included in the standard VAT of 21 percent, while food was subject to a reduced, 15 percent VAT. A new legislation, approved by the Senate in October, introduced a third, ten-percent value added tax rate.

The proposal, which was one of the flagship measures of the centre-left government led by Bohuslav Sobotka, was put forward mainly to benefit pensioners and families with small children.

The prices of baby food in large supermarket chains around the country, such as Tesco or Globus, have already gone down by roughly five percent. Prices of most books, however, are not likely to go down that fast.

Martin Vopěnka, the head of the Association of Czech Booksellers, says most of the books published before January 2015 are not likely to drop in price. The reduced VAT rates will apply mostly to children’s books and books released this year.

While Czech publishers welcome the introduction of the reduced VAT rate on books, they argue that the ten-percent rate still leaves the Czech sales tax on books higher than in most other European countries. They hope that in the future the VAT tax will be reduced even further, to as little as five percent.

Publisher Martin Vopěnka believes that the ten-percent VAT rate will help to stabilize the country’s book market, which has been underfinanced for a long time. Czech publishers also hope that the reduced VAT will make it easier for them to release specialised or more costly titles.

Reduced VAT rates are quite common in Europe. Fifteen EU member states, including Hungary, Belgium, France and Ireland, currently have two reduced VAT rates. The lower rate usually applies to books and medicines.

02-01-2015