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Research by Country/Region January 23, 2018  
CZECH REPUBLIC: CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS

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A. Is this country a member of the Information Technology Agreement?

B. Customs documentation requirements for IT products

C. Software: duties and taxes, updates, licenses, electronically delivered

D. IT services: tax treatment and other regulations

E. Refurbished, used, or repaired computer equipment imports


A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
YES
Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.
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B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS

What are the documentation requirements for the physical import of software? For other information technology products?
The documentation requirements for the physical import of software include an itemized invoice, transportation papers, insurance documentation, and a completed JCD form. If a reduction of tariffs is applicable, a certificate of entitlement is required.
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED

DUTIES AND TAXES ON SOFTWARE IMPORTS

Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
Duties in the Czech Republic are assessed on the intellectual property of the software.

Are taxes assessed on the intellectual property of the software or on the medium on which is it presented?
Taxes in the Czech Republic are assessed on the intellectual property of the software.

Is customized software treated differently than packaged software?
Customized software is still treated as software, but the duty is assessed on the value of the content, i.e. the intellectual property may be increased due to the product being customized.
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IMPORTS OF SOFTWARE UPDATES

What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
When the full sales price is shown on the original commercial invoice, no further update charges are allowed providing all the documentation is approved during initial customs inspections. The updates have to be described in detail, and a reference number pertaining to the first commercial invoice and copy of the invoice must be shown.
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SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER

Are software licenses classified in Harmonized System 4907?
Software licenses are classified in Harmonized System 4907.

Are import duties/taxes applied? If so, on what cost/price base are they levied?
Import duties/taxes are applied, and they are levied at 1.6 percent.

Are withholding or other additional taxes applied on software licenses? If yes, how?
Under the terms of the U.S.-Czech Republic bilateral tax treaty, withholding taxes on rolayties are 0%.

If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
Even if a U.S. license agreement is included in the packaging or is part of the installation/registration of the imported shrink-wrapped software, the agreement is not binding in the Czech Republic. In order for a Czech partner to be obligated to respect U.S. laws, the partner must provide a written statement of agreement with U.S. licensing laws to his American counterpart. Otherwise, Czech law would still pertain.
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SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE

Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
Import taxes and VAT are applied to software delivered to the end-user over the Internet. Taxes are assessed on the intellectual value of the property.

Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
The duties / taxes are the same for distributors who have a license to replicate and sell the software.

What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
An itemized invoice is required for electronically delivered imports of digitized products over the Internet and other networks. The Czech Republic, as an accession member of the European Union (EU), complies with the rules pertaining to electronic imports stated by the EU.

Must an electronically delivered software import be accompanied by a physical shipment of the same product?
According to Czech law, cross-border electronically delivered software has to be accompanied by a physical shipment. This requirement (passed by the Czech Parliament) is called "The Customs Administration." It is managed by the General Directorate of Customs and the Ministry of Finance of the Czech Republic.
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D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS

Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
Services relating to the sale of the software are taxed at 5 percent.

Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
Yes.

Are special visa, work permits, and/or professional certification by an accredited body required?
American passport holders staying more than 90 days are required to obtain visas. When service company personnel are only demonstrating or assembling parts, no professional certification is required.
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E. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS

1. REFURBISHED COMPUTER EQUIPMENT
Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?
The import of refurbished computer hardware to the Czech Republic is permitted.

If so, what are the documentation requirements?
An itemized invoice with current value is required.

Is special labeling required?
No special labeling is needed unless the goods are fragile and require special handling.

What value should be shown on the invoice?
The listed invoice value is determined by customs according to age and model of the refurbished hardware.

How are duties and taxes assessed?
The same rules hold true for imported new computer hardware.
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2. USED COMPUTER EQUIPMENT
Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
Answers are the same as for refurbished computer hardware. See answers in section E.1. above.
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3. REPAIRED COMPUTER EQUIPMENT
Are duties and taxes assessed on the re-import of repaired computer equipment?
Duties and taxes for re-import of repaired computer equipment are also covered by the WTO agreement providing no new parts have been added to the repaired computer hardware. If the computer will also now be classified as having an improvement, and duties are applicable on these new parts only. The invoice should also clearly state which parts are new and that the computer equipment is being re–imported. The re-import of computer hardware regulations is covered by paragraph 203 of the customs law.

How should the commercial invoice appear?
The same rules and regulations for the process of invoicing applies. Additionally, the invoice should clearly state which parts are new and that the computer equipment is being re-imported.
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RESPONSE INFORMATION

This response was prepared by the U.S. Department of Commerce/Commercial Service in Prague in March 2003. For further clarification please contact:
Luda Taylor
Commercial Specialist
U.S. Embassy, Prague
luda.taylor@mail.doc.gov

Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.

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