When you pick up a bottle of moonshine, a case of beer or a pack of cigarettes in a shop, it’s not just about the manufacturer’s price and the shop’s margin. Excise duty and VAT play a key role in alcohol and tobacco products. The final price is a legal and economic jigsaw: excise duty is first added to the tax-free price and VAT is then calculated on this total.
In this article, we explain how excise duties on alcohol, beer, wine, cigarettes and other tobacco products work and how VAT is reflected in the final amount. We add specific examples of calculations and highlight the changes applicable in 2025.
From a legal perspective, excise duty is a targeted indirect tax on so-called selected products. For alcohol and tobacco, the tax is calculated according to clearly defined rules: the tax is calculated as the product of the tax base and the tax rate set for the product. For cigarettes, the rate is combined (fixed part + percentage of the price), with a mandatory minimum tax. The law also sets out when and by whom the tax is declared, how it is handled under the conditional exemption scheme, and how control and marking (stamps for alcohol and tobacco) is carried out.
VAT, on the other hand, is a general tax. From 2024 we have a basic rate of 21% and a reduced rate of 12%. Alcoholic beverages fall under the basic rate of 21%, so alcohol, wine and beer are taxed at 21%.
In practice, this means that excise duty (depending on the type of product) is first added to the price net of tax, and only on this subtotal is the 21% VAT applied. Therefore, the share of taxes in the final price tends to be very high.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
The tax is based on the quantity of pure alcohol (ethanol) expressed in hectolitres of absolute alcohol (hl a. a.). The excise duty rate on alcohol is increased in 2025 as part of the multiannual plan and amounts to 39 100 CZK/hl a. a. (i.e. 391 CZK per litre of 100% alcohol). The Ministry of Finance has already confirmed a 5% increase in 2026.
Example – excise duty on alcohol (40% alcohol)
The excise duty is usually declared by the producer or importer on release for free circulation. You, as consumers, then pay it in the total price at which you buy the alcohol in the shop.
A special (half) rate applies to grower distillation up to the legal limit of 30 litres of pure alcohol per grower and per production period. In practice: at the standard rate of 39,100 CZK/hl a.a., the reduced grower rate works out at 19,600 CZK/hl a.a. and applies only up to the limit. Above the limit, it is taxed at the full rate. VAT of 21 % is then calculated on the sum of the price of the service/product and the relevant excise duty.
Grower’s distilling is the service of a licensed distillery which produces a distillate from the grower’s fruit lees for the grower (the person who grows his own fruit for his own consumption). The production period is generally 1 July to 30 June of the following year.
In beer, it is not the percentage of alcohol that determines the beer, but the so-called “ wort strength” (often written as “Plato strength”). This is the percentage by weight of the extract of the original wort, i.e. how much unfermented substances (mainly sugars) the wort contained before fermentation – the more Plato, the “denser” the beer on entry.
The basic rate of excise duty in the Czech Republic is CZK 32 for each degree of Plato per hectolitre (hl) of beer produced. The excise duty is paid by the producer (brewery) when the beer is put into free tax circulation, however, economically you bear it in the price. VAT of 21% is then applied to the sum of the price without tax + excise duty.
In practice, therefore, the price of the same volume of beer may come out differently depending on the tier and whether it is a large brewery or a small independent brewery for which a reduced rate applies (see next chapter).
Consider a ‘ten’ 10 °P:
Czech law distinguishes between a small independent brewery – typically a microbrewery or a regional brewery, which, if the legal conditions are met, will apply reduced rates of excise duty. Two conditions are key:
The reduced rates are graduated according to the size of the brewery and range from CZK 16-28.8 per °P and hl (instead of CZK 32 for large breweries). The specific classification in the band depends on annual production. 21% applies as for large breweries.
Example – a 10 °P “ten” in a small independent brewery: If a given microbrewery falls into the band with a rate of e.g. 24 CZK/°P/hl, then for 10 °P it comes out to 240 CZK/hl, which is 1.20 CZK per pint. Compared to a large brewery (CZK 1.60), the excise duty is therefore CZK 0.40 per pint lower. VAT of 21 % is then added to this subtotal, as always.
What are the VAT rates in 2025 and how to calculate it? The next article will tell you.
In the Czech environment, several specifics apply to wine, which fundamentally affect the resulting price for the consumer. The most important difference is between still wine and sparkling wine or intermediate products. While still wine (i.e. wine without carbon dioxide overpressure, typically table wines, both dry and semi-sweet) has zero excise duty in the Czech Republic, sparkling wines and intermediate products (e.g. vermouths) are subject to a fixed excise duty rate of CZK 2 340/hl of product. In both cases, however, VAT of 21 % is applied at the time of sale.
In practical terms, this means that for sparkling wine and intermediate products, you first add the excise duty of CZK 2 340/hl to the tax-free price and only then calculate the 21% VAT on this total. For still wine, the procedure is identical, except that the excise duty is zero, so the 21% VAT is based directly on the price without tax.
Tobacco products today include not only cigarettes but also cigars, heated tobacco products, e-cigarette refills and nicotine sachets. Each category has its own excise duty structure. Let’s take a look at each category:
Cigarettes are subject to a combined rate: a fixed part (CZK/piece) + a percentage (% of the price to the final consumer) and a minimum tax (CZK/piece). For 2025, the rates have been increased as part of a multi-year schedule. In practice, the excise duty for 2025 works out as follows:
How the box tax is calculated in practice: For a box of 20 pieces with an end price (which you as a consumer will pay) of CZK 150, the excise duty is approximately CZK 90.60 (sum of the fixed and percentage parts, controlling for the minimum tax). The VAT of 21% is then based on the price including this excise duty, i.e. CZK 26.03. In total, taxes thus account for over three quarters of the final price.
Smoking tobacco is taxed at CZK/kg, cigars and cigarillos at CZK/piece. For 2025, the following values apply: smoking tobacco CZK 3 470/kg, cigars CZK 2,65/piece. VAT of 21 % is again calculated at the end.
From 2024 onwards, a faster increase trajectory for heated tobacco is running: +15% per year from 2024-2027. For 2025, the rate of CZK 3.97/g applies. E-cigarette refills are set at CZK 5/ml and nicotine sachets at CZK 0.80/g. VAT of 21% again follows after the addition of excise duty.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
From 1 January 2024, the VAT system merged the reduced rates into a single 12% rate, while the standard rate of 21% remained. Alcoholic beverages (beer, wine and spirits) fall within the basic 21% rate, leaving VAT on alcohol at 21%.
For alcohol, the state has followed the recovery package and increased excise duty by 10% to 39,100 CZK/hl of absolute alcohol from 2025. A further increase of 5% is announced for 2026.
Tobacco also runs on a multi-year schedule from 2024: for cigarettes and smoking tobacco, the tax increases by 5% per year between 2025 and 2027, while for heated tobacco it increases by 15% per year between 2024 and 2027. A separate tax on e-cigarette refills (CZK 5/ml) and nicotine sachets (CZK 0.80/g) has also been introduced.
For beer and wine, the design remains unchanged: beer is taxed at 32 Kč/hl for each grade of Plato and hectolitre (with the possibility of reduced rates for small independent breweries), while still wine has an excise duty of 0 Kč/hl and sparkling wine and intermediate products 2 340 Kč/hl.
The taxpayer is usually the manufacturer, the tax warehouse operator or the importer. The tax arises when the product is put into free circulation (e.g. when it is removed from the tax warehouse, when it is imported or when a shortage is detected). You then bear it in the price as the final consumer.
For alcohol and tobacco, stamping and mandatory information (maximum price on cigarettes, batches, warnings) are checked. Do not take unmarked or suspicious products. Suspicions can be reported to Customs.
The operator charges VAT on the price including excise duty. You don’t deal with it – it is part of the final price of the drink.
Non-alcoholic beer (≤0.5% vol.) is not beer for excise purposes. Excise duty is therefore not applicable. VAT is charged as standard.
It is tobacco intended to be heated without burning in a special device.
Yes, Czech law taxes e-cigarette liquids as such, regardless of nicotine content.
Alcohol and tobacco products are not always subject to excise duty and VAT. The law has several narrowly defined exceptions which either postpone taxation (conditional exemption scheme) or exempt the supply entirely.
Alcohol intended, for example, for the production of foodstuffs and additives, for the manufacture and preparation of pharmaceuticals, or specially denatured for technical uses, including samples for compulsory analysis, may be exempt.
If you purchase or import alcohol for these purposes, you will usually need a permit for the receipt and use of selected exempt products issued by the customs office.
When imported in personal luggage, alcohol and tobacco may be exempt from customs duty, VAT and excise duty if you meet the non-commercial nature of the import and the quantitative limits (different for travel from outside the EU, different for intra-EU movements for personal consumption).
Arrival from third countries (outside the EU)
For alcohol, you can bring either 1 litre of spirits with an alcohol content of over 22% (or undenatured alcohol with an alcohol content of at least 80%) or 2 litres of alcohol with an alcohol content of up to 22%. In addition, you can bring 4 litres of still wine and 16 litres of beer.
For tobacco products, 200 cigarettes, or 100 cigarillos up to 3 g/piece, or 50 cigars, or 250 g of smoking tobacco can be imported tax-free. These options can be combined. The limit for heated tobacco products is 100 g, for e-cigarette refills 20 ml and for nicotine sachets 100 g. In addition to the quantity limits, there are also value limits for other goods: €430 for air/road transport, €300 for road transport and €150 for persons under 15 years of age.
Intra-EU movements for personal consumption
Within the EU, neither customs duty nor VAT is applied at the border, but it is assessed whether the goods are for personal consumption and whether they have been taxed in the country of purchase. The indicative levels against which the tax authorities assess the non-commercial nature are as follows: 10 litres of spirits, 20 litres of fortified wine, 90 litres of wine (of which no more than 60 litres is sparkling) and 110 litres of beer.
For tobacco products, the limit is 800 cigarettes, 400 cigarillos up to 3 g/piece, 200 cigars and 1 kg of smoking tobacco. For other nicotine products, the Czech Customs Administration’s methodology uses an indicative 250 g of heated tobacco products, 80 ml of e-cigarette refills and 500 g of nicotine sachets. These levels are not hard limits, but significant exceedances may lead to the conclusion that they are not for personal consumption.
In certain situations, diplomatic missions, NATO armed forces, etc. may benefit from the exemption. These are narrowly defined cases with strict administrative procedures (documents to be certified and approvals to be obtained).
Alcohol and tobacco are exempt from VAT (and also from customs and excise duties) when imported in a non-commercial manner within the limits of the quantities and values set. Again, however, this must be for personal consumption.
Selected entities can claim VAT exemption (typically on the basis of certificates and special procedures). These are international exemptions which only apply once the formalities have been met.
Excise duty plays a major role in the final price of alcohol and tobacco products, to which 21% VAT is subsequently applied. Liquor will be taxed at 39,100 CZK/hl absolute alcohol in 2025 (grower distillation is half-rate up to the 30 l a.a. limit), beer at 32 CZK per grade Plato and hl (with lower bands for small independent breweries). In the case of wine, still wine is excise-free, while sparkling wine and intermediate products have a 2,340 CZK/hl. Tobacco products have different structures: cigarettes have a combined tax (fixed + percentage + minimum), smoking tobacco CZK 3 470/kg, cigars CZK 2.65/piece, heated tobacco CZK 3.97/g, e-liquids CZK 5/ml and nicotine sachets CZK 0.80/g. As a result, for a pack of cigarettes or a bottle of alcohol, taxes often account for the majority of the final price.
The years 2024-2026 bring continuous tax increases (spirits +10% in 2025, for tobacco a long-term increase – cigarettes and smoking tobacco +5% p.a., heated tobacco +15% p.a.). VAT has two rates (12% and 21%) from 2024, with alcohol and tobacco falling under 21%. Exemptions exist in narrowly defined cases (personal imports or special arrangements for diplomats).
No excise duty is payable, but VAT at 21% is still applicable.
It’s not. It has a half rate and a strict limit of 30 l a. a. per period. Above the limit, the full rate applies.
The seller must be licensed, comply with the ban on sales to minors and sell only properly labelled products (stamps, mandatory information).
First, the excise duty according to the product is added to the price without tax, and only then is the 21% VAT applied. Therefore, taxes make up a significant part of the price.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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