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Value added tax (VAT) is one of the most important and widespread sources of government revenue in many countries. This indirect tax is applied to most goods and services within economic circulation. VAT has a fundamental impact not only on the state budget, but also on entrepreneurs and final consumers. In this article we will look at what VAT is, how it works and what are its key aspects.

What is VAT?

VAT or value added tax is an indirect tax that applies to the sale of goods and the provision of services. It is a consumption tax, which means that the final tax is paid by the consumer, not directly by the manufacturer or service provider. VAT applies to every stage of production and distribution and is calculated as a percentage of the price of the good or service.

How does VAT work?

The basic principle of VAT consists in the fact that every entrepreneur within the supply-customer chain pays tax on his turnover and at the same time has the right to deduct the tax he himself paid to his suppliers. In this way, the value added tax is passed on to the final consumer, who does not apply the tax deduction and pays the total VAT.

VAT rates

VAT varies in different countries, both in the amount of rates and in the range of goods and services to which it applies. There are usually two basic rates – standard and reduced. The standard rate is applied to most goods and services, while the reduced rate applies to specific items such as food, medicine, books, or services with cultural overlap.

Exceptions and exemption from VAT

Some products or services may be exempt or zero-rated from VAT. Exemption from VAT usually applies to certain types of activities, such as educational services, healthcare or some financial services. A zero VAT rate means that even if the product or service is exempt from tax, the supplier can deduct the VAT paid at earlier stages of the distribution chain.

VAT in international trade

Special rules for VAT apply in international trade. Goods exported abroad are usually exempt from VAT in the country of origin, while goods imported are subject to VAT in the country of destination. This means that, upon importation, VAT must be paid in the country where the final consumption of the goods takes place.

Crafting a successful business from the ground up is not just an ambitious endeavor—it’s a pathway to both personal satisfaction and financial independence. However, embarking on this journey involves navigating through numerous obstacles. This article aims to shed light on the essential steps aspiring entrepreneurs need to follow to carve out their path to triumph.

Self-Reflection and Choosing Your Venture

The initial step involves introspection to decipher the motives behind wanting to launch a business. Following this, selecting a venture becomes imperative. Opt for a business concept that not only aligns with your interests and abilities but also holds promise in the market.

Investigating the Market and Strategic Planning

Conducting comprehensive market research forms the cornerstone of any prosperous venture. Examine potential clientele, analyze the competition, and stay abreast of market dynamics. Utilize this insight to formulate a strategic business plan, your beacon towards achieving business goals.

Determining the Business Structure and Registration

Selecting an appropriate business structure is critical. Options range from sole proprietorships to corporations among others. Subsequently, formalizing the business with the relevant governmental bodies is essential.

Securing Funding

Establish how you plan to finance your venture. Funding avenues include but are not limited to personal savings, bank loans, investor capital, and crowdfunding platforms. A sound financial plan is vital for sustainable business development.

Establishing Your Brand and Marketing Efforts

Building a compelling brand coupled with a robust marketing strategy is key to drawing and maintaining a customer base. Prioritize the creation of an appealing logo and website, and leverage both digital and traditional marketing avenues.

Operational Management and Expansion

Managing a business encompasses overseeing financial operations, human resources, adherence to legal standards, and more. As your business flourishes, exploring opportunities for expansion becomes feasible.

In a world where digitization and flexibility are becoming more and more the norm, many companies and entrepreneurs are turning to a solution known as a „virtual office“. This concept offers many advantages, especially in the area of reducing costs and increasing work efficiency.

A virtual office is a service that allows entrepreneurs and companies to use all the advantages of a physical office without having to invest in a real workspace. Clients can thus use a prestigious business address, telephone services, postal services and access to meeting rooms without the need for long-term rent or maintenance costs.

One of the main advantages of a virtual office is a significant reduction in costs. Entrepreneurs do not have to pay rent, utility bills, maintenance or purchase of office equipment. This means that they can save significant amounts of money that they can then invest in growing their business.

Another key aspect is flexibility. Virtual offices give entrepreneurs the ability to work from anywhere, which is ideal for those who travel or work remotely. This flexibility also allows companies to respond quickly to changing market conditions and customer needs.

In addition, a virtual office can increase the prestige and professionalism of the business. Providing a prestigious business address significantly contributes to increasing credibility and improving brand perception.

Virtual offices also offer a number of additional services, such as virtual assistants, mail management, access to meeting rooms, and more, which can promote efficiency and productivity.

Nowadays, when many companies strive for sustainability and reducing their ecological footprint, a virtual office can also be seen as a greener solution. Fewer physical workspaces means less consumption of energy and resources.

In conclusion, the virtual office offers a modern, flexible and cost-effective solution for business in the 21st century. It is ideal for start-ups, small businesses, freelancers and even larger companies looking for ways to optimize their operations. With the growing need for adaptability and efficiency, virtual offices are becoming a key element for success in today’s fast-paced business environment.

Joint-stock companies are given the freedom to choose the type of shares they issue, as specified in their bylaws. Shareholders have the ability to hold various types of shares simultaneously. This flexibility is a part of the changes introduced in the legislation governing joint-stock companies starting January 2014.

Companies have the option to issue ordinary shares or shares that carry specific privileges, including different voting powers or profit shares. However, company owners must adhere to principles of fairness and decency, which restrict their actions to some extent.

The legislation now allows for the issuance of „piece shares“ that do not have a nominal value. For instance, if a company initially issues 10 shares, each share constitutes a 10% ownership interest. Issuing another 10 shares would then adjust each share’s ownership interest to 5%.

For these types of shares, there’s no requirement for an expensive revaluation to a new nominal value.

The Corporations Act also outlines the structure of joint-stock company governance. Founders have the choice between forming a dualistic system with a board of directors and a supervisory board, or a monistic system featuring an administrative board alongside a statutory director. Unlike before, it’s now permissible for these bodies to consist of just one individual, facilitating easier management and cost savings for new businesses. Previously, a joint-stock company was required to have six elected officials, split evenly between the supervisory board and the board of directors.

A significant new requirement for joint-stock companies is to maintain an official website that lists essential information like the company’s name, address, ID number, and commercial register entry. The website must also host several documents, including notices for general meetings posted 30 days in advance. Non-compliance with this rule could result in fines up to 100,000 crowns.

This specific website requirement has not been extended to limited liability companies.

The concept of mystery boxes, packages filled with random items whose contents are not revealed until opened, enjoys popularity both internationally and within our nation. Nonetheless, the practice has garnered criticism due to the unethical practices of some vendors.

Vasyl Fales from Disciple, the company behind the Mystery-box.cz online store, highlights a concerning rise in deceitful mystery box offerings. These vendors entice customers with the prospect of receiving high-value goods, often electronics, at a fraction of their worth. Unfortunately, buyers often end up with low-value items worth merely a few dollars, far from the promised high-end electronics.

František Kotrba reports numerous customer grievances regarding their inability to cancel orders or return the mystery boxes within the stipulated period. Complaints also include poor communication from sellers and receiving insignificant items despite paying substantial amounts. Consequently, the Czech Trade Inspection Authority (ČOI) has initiated investigations into these practices for potential violations of the Consumer Protection Act, such as engaging in unfair business practices.

Vojtech Stiblo of Cheap Chains mentions that their company has yet to reject any complaints and believes returns wouldn’t pose an issue, noting an absence of complaints regarding their mystery boxes. Meanwhile, Lacnejšie.sk stipulates that each mystery box, being unique, is not eligible for return based on a change of mind within 14 days. However, Plaza.cz assures compliance with all legal requirements, allowing customers to return products within 14 days provided they are in their original, undamaged condition and packaging. Despite the possibility of customers already owning the selected items or not meeting their expectations, Vasyl Fales reassures that according to the law, customers are always entitled to return their orders, and the company addresses all complaints promptly and efficiently.

In 2023, the Czech Republic is set to transform the landscape of cashless transactions with a groundbreaking service called Cvak, which empowers vendors to accept payments without requiring a physical payment terminal. This development means that even in scenarios where paying with a card was previously impossible, like when visiting a hairdresser, hiring a plumber, or buying snacks from a stall, payments can now be made through a mobile phone.

Air Bank has unveiled a novel approach to facilitate electronic payments at establishments that previously did not have payment terminals and were hesitant to accept card payments. Named Cvak, a term inspired by the sound of a click, this service kicked off with 500 small business operators who joined a preliminary program in December 2023, making it easier for their patrons to transact without cash.

With Cvak, the familiar inconvenience of not being able to use a card at certain locations, such as campsites where the nearest ATM might be miles away, is effectively addressed. This solution promises to eliminate such hassles, even in sought-after destinations like Lipno.

Developed and owned by Air Bank, Cvak is set to expand its reach with the inclusion of three additional banks in the first quarter of the year: Fio banka, mBank, and MONETA Money Bank. The Cvak service streamlines payments by transferring funds directly from the customer’s account to the merchant’s account for those with accounts in the participating banks, or via card for customers with accounts in other banks, all without the need for traditional payment terminals.

The recent adjustments introduced by the consolidation package affect a broad spectrum of entities, including corporations. This article provides a concise overview of the key changes.

Treatment of Unrealized Foreign Exchange Differences

Under the previous regulations valid until the end of 2023, all exchange rate variations were included in the tax base, encompassing both realized and unrealized foreign exchange differences. In scenarios involving exchange rate losses, these were considered tax-deductible expenses, whereas exchange rate profits were always deemed taxable income. The enactment of the consolidation package, however, ushers in a novel approach to the treatment of unrealized foreign exchange differences, allowing businesses to omit these from their taxable income.

Unrealized foreign exchange differences emerge from the need to re-evaluate foreign currency assets and liabilities at the time of the balance sheet. This re-evaluation process generates exchange rate differences. Businesses now have the option to adopt a policy that allows them to exclude unrealized foreign exchange differences from their taxable income.

The core principle behind excluding these unrealized foreign exchange differences is that they are only recognized as a tax expense or taxable income when they become realized. However, opting into this policy requires adherence to specific guidelines, such as notifying the tax authority of the decision within three months from the start of the fiscal year.

Adoption of Functional Currency

Traditionally, the law mandated that financial records be maintained in Czech currency, with parallel accounting in a foreign currency if utilized. Now, entities have the option to conduct accounting in a so-called functional currency, such as euros or dollars.

The functional currency is defined as the primary currency of the environment in which the entity primarily operates. Despite the allowance for accounting in a functional currency, entities must still report in Czech crowns for tax purposes, including value-added tax calculations.

Amendments to Extraordinary Depreciation Rules

Significant modifications have also been made in the realm of extraordinary depreciation. The new regulations permit the application of extraordinary depreciation exclusively for emission-free vehicles acquired between January 1, 2024, and December 31, 2028. Entities aiming to leverage this benefit must satisfy certain legal criteria.

The entity must be the initial owner of the depreciating asset, which should be depreciated continuously to 100% of the purchase price within 24 months. Depreciation is applied uniformly up to 60% of the purchase price in the first year, and evenly up to 40% in the subsequent year.

Notably, the application of extraordinary depreciation must be continuous and precisely calculated by the month. Additionally, depreciation must commence in the month following the fulfillment of depreciation criteria, with amounts rounded to the nearest crown.

The Ministry of Culture proposes to introduce the status of an artist into the domestic legal order. Whoever gets it will be able to apply for a contribution for creative or study purposes.

A few days ago, the comment procedure for the draft amendment to the Act on Certain Types of Cultural Support, which was prepared by the Ministry of Culture, ended. The amendment primarily introduces the status of an artist, which should help artists who do not have sufficient income from their artistic activity. Those who obtain the status of an artist will be able to apply for contributions for creative or study activities, the so-called scholarships. Although these can already be granted at the present time, the conditions of who will be able to request everything will change.

Scholarship applicants will no longer be restricted by age (the age limit of 35 years is abolished) and the possibility of repeated drawing of the scholarship is further expanded – now it is possible to draw the scholarship only twice. The most important change, however, is the narrowing of the range of scholarship applicants to only those persons who have been granted the status of an artist, adds the explanatory report to the proposal, stating that 100 million crowns should go to scholarships.

The status of the artist will also be linked to possible support in extraordinary situations, such as the COVID-19 pandemic.

How should an artist be defined?

The artist himself is defined using the general concept of copyright law and other regulations, not only legal ones. It is assumed that, for example, the National System of Occupations will be used. The proposal therefore treats the concept of artist in relation to various definitions introduced, e.g. copyright law or bilateral international treaties on the avoidance of double taxation, which define the concept of artist relatively precisely. At the same time, the proposal will also consider an author or translator in the sense of the copyright law, as well as related professions (e.g. sound engineer), as the explanatory report explains.

Conditions for obtaining artist status

Not all artists will be able to obtain artist status. The basic condition should be that the natural person performs an artistic or related activity for at least 24 months before the date of submission of the application for registration in the register. Another condition is that for at least 24 months prior to the date of submission of the application for registration in the register, the person concerned has not been in an employment relationship or an employment relationship exceeding half of the specified weekly working hours. The submitter assumes that artists with a legal relationship of this type have a certain income guaranteed in terms of relevant regulations, including in the area of health and social security, adds the explanatory report.

Open space offices are becoming a trend in the world of work. Their main advantage is cost savings and better opportunities for teamwork. But, how to prevent interference and noise and ensure that the employees work comfortably? Check out our tips.

Reduce the noise

In open space offices, noise and traffic are often the biggest problem. A suitable solution is to invest in acoustic panels for walls and ceilings or in screens, which will help reduce noise and at the same time add style to the interior. You can also add other furniture that can absorb the sound.

Create privacy and peace of mind for employees

It is important that employees have a sense of privacy. Dividers between tables are one way to achieve this. In an open space, handling phone calls can be a little annoying. Therefore, set up special zones for calling so that others are not disturbed. You can also use acoustic boxes or rooms.

Arrange tables efficiently

Place desks so that teams that often work together sit close to each other. Also take into account individual work preferences – someone needs silence, others prefer a busier environment.

Build rest areas

Don’t make employees sit at the computer all day. Set aside a space for relaxation with comfortable furniture such as armchairs, sofas or even swings. Give them a place to relax before diving back into work tasks. The favorite table football or darts will also help to unwind.

Use professional services

If you are not sure how to equip an open space office, you can use the services of an architectural studio that will help you with the realization and design of an open space office. In many cases, they also provide 3D visualization, thanks to which you get a clear idea of how the open space will look in reality.

The Circular Economy Research Center (CERC) highlights a shift in how waste is perceived—not as a nuisance but as a valuable asset. According to StartUs insights, beyond traditional mechanical recycling, transforming waste into energy via methods like incineration, gasification, anaerobic digestion, and pyrolysis represents a significant trend in the circular economy. This approach allows businesses to efficiently dispose of waste while harnessing its energy potential. Industries such as food, fashion, and agriculture, known for generating substantial waste, are discovering innovative ways to repurpose their waste. For instance, the fashion sector is turning textile scraps into new garments, shoes, and accessories, thereby cutting down on raw material expenses and enhancing sustainability and corporate responsibility.

StartUs insights spotlight ventures like the Danish startup WAIR, which repurposes textile remnants from jeans and workwear into eco-friendly sneakers, and the UK-based SEaB Energy, which developed a system to convert waste into energy. This system, a compact anaerobic digester named Muckbuster, processes manure and farm waste into electricity, heat, and fertilizer. On Podnikateľl.sk, there have been features on entrepreneurs crafting products like bags, backpacks, and decorations from used jute coffee sacks.

Linking closely to waste utilization is the practice of refurbishing and remanufacturing, enabling several enterprises to base their business models on these practices, thereby reducing waste and conserving energy. Yazmin Padrilla elucidates in her article that refurbishment is an industrial process rejuvenating previously sold, worn, or defective products or parts to meet or surpass their original condition. This process stands apart from recycling or repairing by guaranteeing a certain performance and quality level. Remanufacturing boasts benefits like diminished energy use in production, waste reduction, lower disposal costs, and providing quality goods at reduced prices. Items commonly subjected to remanufacturing include aircraft and automotive parts, electronics, engines and components, medical devices, and office furniture. Remanufacturing is pivotal for resource-efficient manufacturing, extending the lifespan of parts and materials, significantly cutting energy usage and CO2 emissions, fostering efficient resource use, job creation, and economic expansion, as summarized by Yazmin Padrilla.