The Ministry of Finance of the Czech Republic has presented the basic parameters of the new windfall tax. Who will be the subject to the tax? How will it be calculated? And how will it be paid? Read a summary of all the important information in our article.
The information is based on data provided by the Ministry of Finance of the Czech Republic as of 6 October 2022 and may be subject to change in the coming days or weeks.
Who will be payer of the windfall tax?
Banks – under the following conditions:
- for the first reporting period ending on or after 1 January 2021, the bank achieves annual net interest income of at least CZK 6 billion;
- and at the same time, in the period of application of the windfall tax (i.e. calendar years 2023-2025), it achieves annual net interest income of at least CZK 5 million.
- if, for the first financial reporting period ending on or after 1 January 2021, the taxpayer, alone or together with other members of the consolidated group, achieved an aggregate net turnover of at least CZK 2 billion from the following activities:
– production and trade in energy (electricity, gas, and fuels); or
– petroleum and fossil fuel production (coal, coke, oil, natural gas);
- and at the same time, if in the period of application of the windfall tax (i.e. in the calendar years 2023-2025), the net turnover from the above activities at the taxpayer amounts to at least CZK 5 million.
Special conditions apply to companies involved in the extraction and processing of fossil fuels and their products. They become subject to the windfall tax if:
- in the windfall tax period (i.e. calendar years 2023-2025), they have an aggregate net turnover of at least CZK 5 million from these selected activities.
When will the windfall tax be due?
- The windfall tax will be payable for the calendar years 2023 to 2025, or for the taxable period falling within that timeframe.
How much will the windfall tax amount to?
- The tax base will be calculated as follows:
the average of the adjusted tax bases for the years 2018 to 2021 will be deducted from the adjusted current tax base.
- The windfall tax rate will be 60%.
- The windfall tax base is based on the adjusted ‘general’ tax base, the new tax will therefore apply to windfalls from all activities of the taxpayer.
How will the windfall tax be paid?
- A separate windfall tax return will probably be prepared for the new tax.
- There will be a special arrangement for advance payments of the windfall tax which is to apply already during 2023.
More information on the windfall tax can be found on the website of the Ministry of Finance of the Czech Republic.