News on tax obligations when providing transport services via mobile applications

The updated GFD information is effective from 1 January 2025 and replaces the previous version of the information from 2023.
 

Value added tax

The provision of passenger transport services for consideration via a mobile application with the place of supply in the Czech Republic is a taxable supply for VAT purposes, regardless of whether the transport provider has the relevant trade licence.

The new GFD information refers to the current conditions for mandatory VAT registration, which are based on GFD’s general information on changes in VAT payer status and registration procedures from 1 January 2025.

Where a transport provider established in the Czech Republic is not yet a VAT payer, they will become one no later than 1 January of the following calendar year if their turnover in the immediately preceding calendar year exceeds CZK 2 million. However, if their turnover exceeds CZK 2,536,500 before the end of the taxable period, they become a VAT payer already from the day following the date on which the threshold was exceeded.

Similarly, a service consisting in providing access to a mobile application that allows a taxable person established in the Czech Republic to receive transport requests is also a taxable supply from a VAT perspective.

If the service of access to the mobile application is provided by a person not established in the Czech Republic and the passenger transport provider is a VAT payer, the transport provider is obliged to declare output VAT on this service and, at the same time, has the option of claiming a VAT deduction if the legal conditions are met.

If the transport provider is not registered for VAT as a payer, they are obliged to register as a person identified for VAT regardless of the amount of turnover. In such a case, they will pay output VAT on the service received but will not be entitled to claim input VAT.
 

Income tax

If transport services are provided by natural persons, they are subject to personal income tax with the option of claiming actual expenses or expenses as a percentage of income. If the provider meets the legal conditions, they may enter into a lump-sum tax regime.

Service providers who are legal entities tax all income through their corporate income tax returns.

There is also the possibility that other natural persons may perform transport for a natural or legal person. The GFD information has now drawn attention to the obligations of transport service providers as payers of tax on income from employment (dependent activity). This applies to natural or legal persons operating transport services if these services are performed for them by natural persons on the basis of a contractual relationship that fulfils the characteristics of a dependent activity (activity performed personally, on behalf of and according to the instructions of the employer, in subordination to the employer who has the authority to direct the performance of work and issue binding instructions). The type of contractual arrangement, i.e. employment contracts or other agreements on personal performance of work, is irrelevant in this case (e.g., a “Svarc system” or disguised agency employment).
 

Cooperation between platforms and financial administration

The GFD also announced that it had signed its first memorandum of cooperation with the Bolt technology platform. This agreement focuses on the regular provision of selected data for tax administration purposes and represents an important step towards the greater transparency of the ride-hailing platform sector. It is expected that the data will be used to verify the tax obligations of persons involved in the provision of transport services.