Dentons secured a victory for Veolia Energie ČR before the Czech Supreme Administrative Court, in a litigation regarding interest from illegal gift tax in energy context. The case concerned a gift tax imposed on all emission allowances allocated to power plants in breach of the EU law. After the ECJ declared this tax illegal in the Skoda Energo case, the Czech tax authorities correctly reduced the tax but refused to pay the interest accrued as a result of the illegally imposed tax.
In its decision, the Supreme Administrative Court confirmed that the tax authorities have to pay interest from the date when the tax payer paid the illegal tax under the original decision of the tax authority imposing the tax (in Czech: platební výměr) and not only from the later decision on the change of the tax (in Czech: dodatečný platební výměr). This refined the previous landmark decision of the same court from 2017 (see 5 As 27/2017 – 45), and confirmed Dentons’ position that the tax authorities need to pay the interest accrued from the illegally imposed tax with respect to the entire period.
Commenting on the case, Petr Zákoucký, Head of Dentons’ Energy and M&A practices in the Czech Republic, said: “This follow-up decision of the Supreme Administrative Court should make the Czech tax authorities think twice when interpreting the Czech tax legislation, in a way which potentially conflicts with EU law. This landmark decision gives Czech tax payers recourse against the tax authority with regard to this illegally imposed tax.”
“Dentons keeps delivering great results even in these novel cases. Their Energy team stands out on the Prague market, we are grateful for our collaboration,” said Ondřej Hořín, the Head of Legal of Veolia Energie ČR.
Dentons’ team was led by partner Petr Zákoucký, alongside managing associate Barbora Obračajová and associates Michal Pelikán, Justina Bodláková, Jan Tylš and Anna Urbanová.