What an 'Unreliable VAT Payer' Means and the Liability Risk
The tax administration labels as unreliable a payer who seriously breaches VAT obligations. Whoever buys from them is liable for the VAT the supplier fails to pay. Check the status before paying.
An unreliable VAT payer (Sec. 106a of the Czech VAT Act) is a status the tax administration assigns to a payer who seriously breaches VAT obligations — typically long-term non-payment or deliberately obstructing tax administration. The list is public.
Your risk: liability for the supplier's tax
If you receive a taxable supply from a supplier who was publicly listed as unreliable at the time of the supply, you are liable for the VAT the supplier fails to pay on it (Sec. 109 of the VAT Act). The tax authority can then recover the unpaid tax from you.
Case law keeps the liability within limits: per the Supreme Administrative Court, liability does not arise automatically — the authority must prove circumstances showing you knew or should have known the tax would go unpaid (see the judgment on payments to foreign accounts, 5 Afs 78/2017). And the unreliable status itself must be imposed individually and proportionately (10 Afs 513/2021).
How to protect yourself
- Before the deal and before payment, check the supplier's status — the unreliable payer check takes seconds.
- Pay to a published account — paying to an account the supplier has not published in the register is another liability trigger; verify published accounts here.
- Archive the verification results as evidence of good faith.
Practical example
A supplier offers a great price but has been listed as unreliable since last month. If you accept the supply and they fail to pay the tax, the tax office can recover the 21% VAT from you — CZK 210,000 on a one-million-crown job.