Czech restaurants to cut VAT on soft drinks to 12% from Jan. 1

From Jan. 1 next year, Czech restaurants will charge the reduced 12 percent VAT rate on all soft drinks served with a meal. Previously, the lower rate applied only to some drinks, including tap water, milk-based drinks and their plant-based alternatives. The change will simplify bookkeeping and paperwork for restaurateurs, but experts say diners should not expect noticeably lower prices.

Michal Jelínek of V4 Group says the VAT cut will help venues adjust prices or at least partly offset the rise in costs of recent years. However, “you can’t expect every restaurant to automatically pass on the whole difference between the rates.” Each venue will base its decision on its own finances.

It is also important to distinguish whether a drink is served as part of a catering service or sold as a separate product. A takeaway drink consumed outside the venue is still taxed at the standard 21 percent rate. According to Jelínek, misconfigured rates in a cash register system after the change takes effect could become a source of unnecessary tax problems.

Easier to operate

Miroslava Tomášková of KODAP City notes that the new rules will above all simplify the day-to-day work of restaurants and cafés. Some of the illogical distinctions will disappear, where each drink required checking its composition: water, milk drink, coffee or lemonade. Full alignment, however, will not happen.

For business owners, she stresses, it will be important to receive not only practical guidance but also enough time to change price lists, stock and till items, and accounting settings. Registering sales, according to available information, will not require sending a breakdown by VAT rate, but such a breakdown is still needed for a correct tax return.

Why this is long overdue

Restaurateurs, of course, welcome the change. Václav Stárek, president of the Czech Association of Hotels and Restaurants, called it senseless that soft drinks were taxed at the higher rate while meals were taxed at the reduced one. In his words, this is more a technical and accounting detail, but a single rate is definitely good news for restaurateurs.

Diners, Stárek believes, should not get their hopes up for cheaper drinks: “I don’t think prices of soft drinks will fall.” Tomášková thinks the same: a lower VAT does not necessarily mean cheaper drinks, and venues may use it to stabilize prices and cover rising costs.

Price growth will stop

Luboš Kastner, a board member of the Chamber of Commerce and the Association of Small and Medium-Sized Enterprises and Self-Employed, is convinced that guests will not end up worse off: “In some places it may slow price increases or stop them altogether.” With fierce competition in gastronomy, every crown counts. “In Prague’s Vinohrady, for example, there is one of the highest concentrations of cafés, and if a business owner raises prices by ten crowns, he drops out of the market he operates in,” Kastner gave as an example. He is not ready to believe that all the money saved will end up in pub owners’ margins.

Around Prague guide on the topic: Czech tax return: how to file for 2025

Around Prague, based on reporting by denik.cz