Less than a year ago, in an article (here), we provided readers with a summary of the key points to consider in the context of the windfall gains tax liability that applies between 2023 and 2025.
The windfall profits tax was introduced in Czech legislation by means of an amendment to Act No. 586/1992 Coll., on Income Taxes, as amended, by Act No. 366/2022 Coll, The General Financial Directorate ("GFD") has noticed an interpretive uncertainty among the taxpayers concerned, which stems from the question of the determination of the deadline for filing the windfall profits tax return in relation to the deadline for filing the corporate income tax return. The GFD seeks to remove this uncertainty vis-à-vis taxpayers and, in consultation with the Ministry of Finance, in January 2024 issued on its website information on the assessment of the running and length of the time limit, which aims to reflect the basis of administrative practice and thus help to avoid potential disputes in this area.
Subject of interpretive uncertainty:
GFD's conclusion on the question:
Finally, the GFD refers to the web signpost of topics dedicated to the details of the substantive and procedural regulation of this tax obligation.
Example:
The corporate taxpayer (Ltd.) applies the calendar year ending on 31 December 2023 (= tax year 2023). The taxpayer has established that it has fulfilled the conditions for a windfall profits taxpayer for the 2023 tax year, so it is required to file a windfall profits tax return with the tax authorities in addition to its corporate income tax return. The taxpayer is an audited company that has authorized a certified tax advisor to file all tax returns.
Statutory deadlines for filing tax returns for the 2023 tax year:
Statutory deadlines for filing tax returns for the 2023 tax year
We believe that the interpretative uncertainty regarding the independent assessment of deadlines has been eliminated by this official information of the GFD. If your windfall profits tax liability affects you and you have more questions than just the outlined timing issues, our experts are ready to provide comprehensive advisory services to help you meet these tax obligations.
The windfall profits tax was introduced in Czech legislation by means of an amendment to Act No. 586/1992 Coll., on Income Taxes, as amended, by Act No. 366/2022 Coll, The General Financial Directorate ("GFD") has noticed an interpretive uncertainty among the taxpayers concerned, which stems from the question of the determination of the deadline for filing the windfall profits tax return in relation to the deadline for filing the corporate income tax return. The GFD seeks to remove this uncertainty vis-à-vis taxpayers and, in consultation with the Ministry of Finance, in January 2024 issued on its website information on the assessment of the running and length of the time limit, which aims to reflect the basis of administrative practice and thus help to avoid potential disputes in this area.
Subject of interpretive uncertainty:
- Does the deadline for filing a windfall profits tax return derive from (and therefore always coincide with) the deadline for filing a corporate income tax return, or are the deadlines treated separately? Can the deadline for filing the windfall profits tax return be extended at the same time pursuant to Section 36 of Act No. 280/2009 Coll., the Tax Code, as amended (the "TC")?
- The windfall profits tax is a separate corporate income tax with its own budgetary designation.
- Explanatory memorandum to the amendment: the windfall profits tax is a sub-category of corporate income tax that applies only to selected corporate taxpayers; a special tax base is determined for this tax with the application of a special tax rate. As it is still a corporate income tax, the provisions on corporate income tax apply in other respects (e.g. regulation of the tax period, filing of the tax return).
- Since windfall profits tax is claimed separately and separately from corporate income tax and on a separate tax return form, the administration of windfall profits tax is completely independent of corporate income tax administration in terms of process. The various procedural institutes, including the time limits for filing tax returns, must therefore be applied separately.
GFD's conclusion on the question:
- The deadline for filing a windfall profits tax return is derived from identical provisions as the deadline for filing a corporate income tax return, but these deadlines are independent of each other.
- The tax administrator will assess the deadlines separately in the context of individual facts that may arise in the areas of corporate income tax or windfall profits tax. The two deadlines may thus coincide but also diverge as a result of individual decisions to extend the deadline.
Finally, the GFD refers to the web signpost of topics dedicated to the details of the substantive and procedural regulation of this tax obligation.
Example:
The corporate taxpayer (Ltd.) applies the calendar year ending on 31 December 2023 (= tax year 2023). The taxpayer has established that it has fulfilled the conditions for a windfall profits taxpayer for the 2023 tax year, so it is required to file a windfall profits tax return with the tax authorities in addition to its corporate income tax return. The taxpayer is an audited company that has authorized a certified tax advisor to file all tax returns.
Statutory deadlines for filing tax returns for the 2023 tax year:
- corporate income tax return = 1 July 2024
- windfall profits tax return = 1 July 2024
Statutory deadlines for filing tax returns for the 2023 tax year
- corporate income tax return = 1 July 2024
- windfall profits tax return = 2 September 2024
We believe that the interpretative uncertainty regarding the independent assessment of deadlines has been eliminated by this official information of the GFD. If your windfall profits tax liability affects you and you have more questions than just the outlined timing issues, our experts are ready to provide comprehensive advisory services to help you meet these tax obligations.