Czech Republic: VAT guidance on charitable donations and subsidy projects
Updated guidance clarifies VAT treatment of donated goods and input VAT recovery in subsidy-funded projects.
The Czech Financial Administration has updated its information on gratuitous supplies of goods and published an opinion on the right to deduct input VAT in subsidy-funded projects.
The updated guidance clarifies that businesses making charitable donations of goods may, in certain circumstances, determine the VAT tax base at a very low value. The guidance expands this treatment to include clothing and textiles and outlines documentation requirements to support both the donation and the valuation of the goods.
The Financial Administration confirmed that entitlement to deduct input VAT in subsidy projects depends on how the acquired goods and services are used, rather than on the source of funding. A deduction generally is not available when inputs are used solely for gratuitous activities unrelated to the taxpayer’s economic activity. However, input VAT recovery may be allowed, in whole or in part, when project outputs are used or intended for use in taxable business activities and are supported by objective evidence.
Read an August 2026 report prepared by the KPMG member firm in the Czech Republic