State administration’s response to uncertainties related to windfall tax

The Tax Administration has published answers to several questions related to the application of windfall tax on its website. The answers address some uncertainties regarding the determination of the taxpayer, the definition of a group (reference is made to the document “Questions and Answers on CbCR” published on the website of the Tax Administration), the taxable period, and the deadlines for filing windfall tax returns.

Another relatively extensive area addressed is the calculation of the tax base on windfall tax, in particular the possibility of shifting the average of adjusted comparative tax bases within a group of companies and calculating comparative tax bases. In this context, the Tax Administration also provided examples of recalculation of the comparative tax base which is determined for a different period than the comparative tax base. With regard to the possibility of shifting the average of the adjusted comparative tax bases, a form of notification on shifting the average of the adjusted comparative tax bases (marked 25 5261 MFin 5261 – Template No. 1) has already been published for the use of this possibility, including instructions for its completion.

The Tax Administration has also answered a number of queries regarding advance payments of windfall tax, particularly for the first advance period from 1 January 2023. For the first advance period, advance payments will be determined based on a fictitious tax notification. In the event of delay in paying the advances or filing a fictitious tax notification, the standard penalties provided for in the Tax Code will apply.

Moreover, the Tax Administration has published on its website the answers of the Czech Statistical Office to questions concerning the classification of specific activities according to CZ-NACE for the purposes of windfall tax, where the CSO is primarily concerned with the distinction between wholesale and retail activities in connection with the sale of fuels. The Czech Statistical Office provides methodological assistance in the classification of individual activities of companies according to the NACE classification, but its classification is binding only for the relationship between the State Statistical Service and the relevant respondents. It is therefore questionable how this classification is enforceable in the absence of a legal definition from the perspective of windfall tax.

As regards the uncertainties regarding windfall tax, it should be noted that in addition to the above information published on the website of the Tax Administration, representatives of the Chamber of Tax Advisors and representatives of the General Financial Directorate discussed a number of other questions on which the GFD also commented (e.g. the effect of restructuring on the calculation of windfall tax, the inclusion of amounts due to reinvoicing, the determination of the relevant income in the case of combined heat and power production and others).

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