In real business operations, invoices are rarely paid in full and on time. Clients often pay in parts, in stages, with delays or irregular installments. With the introduction of § 74b ZDPH, such situations directly affect the amount of recoverable VAT deduction and the moment the obligation to adjust arises.

We will explain how to handle situations where payments are received partially, with delays, or in several stages. You’ll learn how to account for advances and deposit payments, what to pay attention to when calculating the deduction adjustment, and how to proceed if a client pays the invoice after the six-month period has passed. All recommendations are supported by practical examples from real-world VAT workflows.

What Is Considered a Partial Payment under § 74b

For the purposes of § 74b ZDPH, a partial payment is any situation where only a portion of the invoice amount has been paid, while the remaining balance remains unsettled.

In practical terms, this means:

• The invoice is not fully paid—only part of the total amount has been settled;
• The remaining unpaid amount, once the payment due date (splatnost) has passed and the six-month period has elapsed, is considered a závazek po splatnosti (overdue obligation) in that corresponding part.

Important:

• It doesn’t matter whether the client made one, two, or five payments. What matters is the final result: how much of the invoice is actually paid by the end of the six-month period;
• Only the actual funds received in the bank account are considered as payment. Promises, agreements, or unconfirmed intentions do not count.

The proportion of the invoice that has actually been paid determines which part of the VAT deduction is retained and which part must be returned under § 74b.

The Principle of Proportional VAT Adjustment

In the case of partial payments, a proportional approach is applied to the VAT deduction adjustment. The logic of § 74b ZDPH is based on the idea that the right to deduct VAT is retained only for the portion of the invoice that has actually been paid.

The core principle is as follows:

• The VAT deduction remains valid in the amount corresponding to the paid portion of the invoice;
• For the unpaid portion, a povinnost opravy (obligation to adjust) arises — the taxpayer must return the VAT proportionally to the unpaid amount (outstanding balance).

This means the VAT return is not an “all or nothing” scenario. The adjustment amount is always calculated as the share of VAT corresponding to the unpaid portion of the obligation. For example, if 40% of the invoice has been paid, the taxpayer keeps the deduction for those 40%. For the remaining 60%, they are required to return the proportional part of the VAT.

This proportional approach reflects the central idea of § 74b: the deduction is only justified where it is backed by an actual payment.

Formula: How to Calculate the VAT Amount to Be Returned

To determine what portion of the VAT deduction must be returned in the case of partial payment, you can follow a straightforward calculation method.

Basic Terms:

• základ daně (ZD) — the amount excluding VAT;
• DPH — the VAT amount on the invoice for which the deduction was claimed;
• unpaid percentage — the portion of the invoice that remains unpaid.

Calculation Algorithm:

1. Determine the unpaid portion of the invoice (either as a percentage or monetary amount).
2. Calculate the share of VAT corresponding to this unpaid portion: apply the same percentage to the VAT amount previously claimed.
3. The result is the VAT amount that must be returned under the adjustment required by § 74b.

In essence, the taxpayer returns only the part of the deduction that corresponds to the unpaid portion of the invoice — not the full VAT amount.

Example: Invoice 100,000 Kč + VAT, 40% Paid

Let’s assume the supplier issued an invoice for 100,000 Kč + VAT. The recipient recorded the invoice and claimed the full VAT deduction in their tax return. The payment due date (splatnost) arrived, but within the six-month period following this date, the client paid only 40% of the invoice amount. The remaining 60% remains unpaid.

According to § 74b, the situation is assessed as follows:

• For the 40% paid: the obligation is fulfilled, meaning this part of the invoice is covered by actual payment.
• For the remaining 60%: the obligation remains unpaid and, after the six-month deadline, becomes a závazek po splatnosti (overdue obligation) in the corresponding amount.

The VAT deduction is retained only for the portion corresponding to the 40% that was paid. For the remaining 60%, there is an obligation to return the VAT proportionally to the unpaid part. In other words, the right to deduct VAT is preserved only for the amount actually paid; for the unpaid portion, the deduction must be adjusted.

If Part Is Paid Before 6 Months, and Part After

When dealing with partial payments, the timing of the payment—before or after the six-month deadline—is essential.

Scenario 1: Part of the invoice is paid before the six-month deadline; the rest remains unpaid
In this case:

• VAT deduction is retained for the portion that has been paid.
• For the unpaid portion still outstanding at the end of the six-month period, povinnost opravy arises—the corresponding portion of VAT must be returned.

Scenario 2: The taxpayer already corrected the VAT according to § 74b and returned the deduction on the unpaid part. Later, the client makes an additional payment or settles the full amount
In this case:

• The taxpayer gains the right to reclaim the VAT deduction for the portion that has now been paid.
• This recovery is made in the tax period when the payment was actually received.
• The calculation uses the same proportional logic: the paid portion is applied to the VAT amount.

Thus, both the timing and the amount of payment determine what portion of the deduction must be returned after the six-month deadline—and what portion can later be reclaimed if payments are received.

Advance Payments, Zálohy, and Deposits

When applying § 74b, it’s crucial to correctly account for advance and deposit payments to avoid distorting the calculation of the unpaid balance.

First, you need to distinguish between:

• Advance payments received before the final invoice is issued
• Zálohové faktury (pro forma invoices) and daňové doklady k přijaté platbě (tax documents for received payments) — these are treated differently in accounting and VAT reporting
• Deposit payments, which may later be counted as partial payment against the final amount

The logic for applying § 74b is as follows:

• An advance payment that has already been subject to VAT and recorded in the books reduces the future závazek (liability) from the final invoice
• When calculating the unpaid balance, all advance payments that were actually received and covered part of the VAT must be considered
• Amounts already paid and properly accounted for in VAT reporting cannot be treated as unpaid

That’s why when working with § 74b, it is always important to match the dates and amounts of advance payments with the final invoice: the advance reduces the portion of the amount for which povinnost opravy (obligation to correct the deduction) may arise.

How to Record Payment Dates and Allocate Incoming Payments

Under § 74b, what matters is not a client’s promise to pay, but the actual receipt of funds. Therefore, you must rely not on the client’s payment order date, but on the date the funds are debited to your account, as reflected in the bank statement.

If payments are made in irregular, fragmented amounts, it is important to:

• Record each payment with the exact date and amount
• Link payments to specific invoices or specific parts of the obligation — especially when multiple invoices (faktury) or project stages exist under the same contract
• Document the logic used for allocating payments: which amounts were matched to which invoice, in what volume, and on what basis

Without a clear connection between payments and specific invoices, it becomes difficult to justify why a certain portion of the VAT deduction was returned and why a certain portion was later restored. This significantly increases the risk of disputes during a potential audit of your § 74b application.

What to Do if Payments Were Made in Unclear Installments

Clients often pay irregularly, in varying amounts, and without specifying which invoice they are settling. In such cases, the taxpayer should avoid guessing and instead follow predefined allocation rules.

A practical approach may include:

• Establishing internal rules for payment allocation (e.g., FIFO principle, by specific contract, or to cover the oldest outstanding debt first)
• Documenting these rules in the accounting policy or internal financial procedures
• Keeping evidence of how payments were allocated between invoices and parts of obligations (e.g., internal memos, accounting system notes, or formal internal records)

The goal is to ensure that, in case of a tax audit, it is clear that the VAT calculation under § 74b is based on a consistent and well-documented logic, not on arbitrary decisions made case-by-case.

The algorithm is simple: previously, the VAT deduction for the unpaid portion of the obligation was adjusted and returned to the budget; the client then fully settles the debt, meaning the obligation is no longer considered a závazek po splatnosti (overdue liability); in the period when the payment is actually received, the taxpayer regains the right to deduct VAT for the corresponding portion.

Two key points to consider:

• The deduction is not reinstated retroactively, but in the VAT return for the period in which the payment was actually received.
• The reinstatement follows the rules in effect at the time of recovery (i.e. those introduced after the 2025 reform).

In this way, the correction under § 74b does not permanently block the deduction—it simply ties it to the actual fulfillment of the payment obligation.

Procedure for Reclaiming VAT Deduction After Full Payment

If the VAT deduction for the unpaid portion of an invoice was previously reversed under § 74b, this does not mean the right to deduct VAT is permanently lost. Once the debt is fully paid, the deduction can be reclaimed.

The process is straightforward:

• The VAT deduction for the unpaid portion of the obligation was previously adjusted and returned to the tax authority.
• The client fully settles the debt, meaning the obligation is no longer a závazek po splatnosti (overdue liability).
• In the period when payment is actually received, the taxpayer regains the right to deduct VAT on the corresponding portion.

Two key points to remember:

• The deduction is not restored retroactively, but rather in the VAT return for the period in which the payment was received.
• The rules in force at the time of recovery apply (i.e. those established after the 2025 reform).

In summary, § 74b adjustment does not permanently deny the deduction — it simply defers it until the underlying obligation is actually fulfilled through payment.

Case Study: Debt Paid After Two Years — Can VAT Be Reclaimed?

Yes, the VAT deduction can be reclaimed even if the debt is paid after a long delay — for example, two years later. The key condition is that the right to deduct (nárok na odpočet) remains valid and the general statutory time limit for applying the deduction has not expired.

The scenario typically unfolds as follows:

• After the six-month period expired, the taxpayer returned the VAT deduction on the unpaid portion of the invoice (adjustment under § 74b was made);
• Two years later, the client fully repays the debt;
• In the tax period in which the payment was actually received, the taxpayer regains the right to claim the VAT deduction on the repaid amount.

The mere passage of time does not eliminate the right to reclaim the deduction. However, it is crucial to ensure that the general time limit for exercising this right under the Czech VAT Act has not been exceeded.

Therefore, in cases of long-term payment delays, it is always important to verify statutory deadlines before proceeding with VAT recovery.

How to Avoid VAT Deduction Errors in Cases of Partial Payments

Partial payments, prepayments, and irregular transfers do not override the core principle of “no payment — no deduction,” but they do significantly complicate its application. When working with § 74b, it’s not enough to simply track the six-month deadline — the taxpayer must also precisely determine which portion of the obligation has been paid and which remains unpaid.

Key safeguards for the taxpayer in such cases:

• Accurate recording of the dates and amounts of all incoming payments;
• A clear and pre-established method for allocating payments to specific invoices or portions of obligations;
• A proportional approach to determining the amount of VAT that must be returned or can be reclaimed.

It is very easy to make errors in VAT calculations involving partial payments — especially with irregular transfers and prepayments. That’s why these cases require extra attention from the accountant and a well-structured internal control system.

Professional Support on § 74b ZDPH and VAT Deductions

Venera Service Delivery s.r.o. provides expert support to businesses transitioning to the new VAT rules, including all aspects of applying § 74b ZDPH. We help organize internal processes, establish a payment deadline monitoring system, calculate VAT deductions accurately, and minimize the risk of tax return obligations.

If you want to avoid penalties and adapt effectively to the new requirements, contact our specialists — we will audit your situation and offer a reliable solution.