However, as a result of a change in the interpretation of the classification of individual activities, a corporate taxpayer who previously believed that they were not engaged in the relevant activity may find out that they are obliged to pay the windfall tax. The specific changes apply mainly to fuel trade:

• Fuel card issuers: If the taxpayer buys fuels and sells them subsequently to businesses (i.e. professional users) using fuel cards, according to the CSO, this equals wholesale trade services of liquid fuels and related products (NACE classification code: 46.71.2) and the net turnover from these activities will be considered relevant income for the purpose of the windfall tax.
• Petrol stations: According to the interpretation of the CSO, the common sale of fuels from the pump to business persons (under certain circumstances) also comes under wholesale trade services of liquid fuels and related products (NACE classification code: 46.71.2) and the net turnover from these activities will again be considered relevant income for the purpose of the windfall tax.
• Own non-public gas station: Also, the sale of fuels from a private gas station (i.e. a gas station with limited access of third parties) to businesses (i.e. professional users) is considered wholesale trade services of liquid fuels and related products (NACE classification code: 46.71.2) and is part of the relevant income for the purpose of windfall tax.

According to the information of the GFD, when the taxpayer discovers that they should have become a windfall taxpayer based on the changes in the interpretation of the classification of specific activities above, they will not be exposed to any sanctions (i.e. mainly for failing to submit fictitious tax announcements and pay allowances). However, such taxpayer is obliged to file the windfall tax return for the 2023 taxation period within the statutory deadline.    

For the sake of completeness, we summarise the simplified conditions under which a corporate income taxpayer, who is not a bank, becomes a windfall taxpayer, as follows:

• In the first reporting period ended after 1 January 2021, the taxpayer reached alone or in total for all members of a consolidated group relevant income of at least CZK 2 billion, arising from the following relevant activities:

– Coal mining and processing, extraction of oil and gas;

– Manufacture of coke oven and refined petroleum products;

– Power generation, transmission and distribution (with certain exceptions);

– Manufacture of gas, distribution of gaseous fuels through mains;

– Wholesale trade services of liquid fuels and related products; and

– Transport via oil or gas pipelines;

• And, simultaneously, in the period when the windfall tax is applied (i.e. in the 2023–2025 calendar years), the taxpayer reaches the relevant income from the aforementioned activities of at least CZK 50 million in the respective taxation period.

Another mode goes for companies extracting coal, oil and gas and companies manufacturing coke oven and refined petroleum products.

Relevant income as the basic parameter for the windfall tax application means:

• Annual net turnover following from the aforementioned relevant activities; and simultaneously
• A domestic income taxed in the Czech Republic.

However, the relevant income does not include income from intercompany electricity and gas supplies for own use (as material input) of other entities within the group.

If, based on the information above, you think you might be affected by the change in the interpretation, or if you are unsure, do not hesitate to contact us. We will be happy to discuss your situation and propose appropriate steps to be taken.