DPH is the Czech acronym for Daň z přidané hodnoty, which translates to Value Added Tax (VAT). It is a key indirect tax and one of the largest sources of revenue for the state budget. Unlike direct taxes (like Personal Income Tax), it is not paid by individuals directly from their income; instead, it is included in the price of most goods and services we purchase. The final taxpayer is always the end consumer, who pays the VAT as part of the final price.
The principle of VAT is to tax only the "value added" at each stage of the production and distribution chain. Businesses registered as VAT payers collect the tax from their customers and remit it to the state. At the same time, they can deduct the VAT they paid on their inputs (e.g., for materials, services). This system ensures that the tax is not levied multiple times on the same product. For the year 2025 in the Czech Republic, there are two VAT rates: the standard rate of 21% and a reduced rate of 12%.
