“Amendment to the amendment” of the Czech Energy Act will fix its biggest flaw

The amendment to the Energy Act, which will take effect on 1 January 2016, will be amended before it comes into force. One of the biggest flaws and most criticised provisions of the amendment was the abolition of the electricity tax exemption for environmentally friendly sources. This is now set to change.

A fast „amendment to the amendment“ of the Energy Act will be adopted by the end of the year. Act No. 261/2007 Coll., on the Stabilisation of Public Budgets, where the exemption for environmentally friendly electricity was originally enshrined, will be amended. The exact form of the change is not yet known.

Following approval of the Energy Act amendment, it became the number one topic. The payment of tax on electricity generated for own consumption was even described as „a clear candidate for the Absurdity of the Year anti-award„. Nevertheless, the change passed through the Chamber of Deputies, the Senate, and was ultimately signed by the President of the Czech Republic.

Yet one of the aims of the Energy Act amendment was to facilitate the development of small-scale electricity generating installations, for example by abolishing the requirement to hold a licence for generating facilities of up to 10 kW connected to the distribution system.

While the one-off requirement to obtain a licence was abolished, an obligation to register with the customs office and to pay electricity tax every month was introduced.

For small electricity producers, the electricity tax would amount to only tens of Czech crowns.

„An unstable legislative environment primarily threatens small installation companies, which are fighting to stay on the market and are waiting for new legislative rules,“
Veronika Knoblochová, executive director of the Czech Photovoltaic Industry Association

Amendment to the Act on the Stabilisation of Public Budgets

According to František Kotrba, spokesperson for the Ministry of Industry and Trade, work is already under way on amending the Act on the Stabilisation of Public Budgets in such a way as to retain the tax exemption for electricity generating facilities with low installed capacity. This amendment should take effect on 1 January 2016, at the same time as the Energy Act amendment.

The wording of the amendment is not yet available. The tax on environmentally friendly electricity will probably be changed as part of an amendment to the Income Tax Act, which will also amend the Act on the Stabilisation of Public Budgets.

According to SolarniNovinky.cz, a producer operating an electricity generating facility of up to 10 kW will not be considered self-employed. As a result, their income will fall under the regime for other income pursuant to Section 10 of the Income Tax Act, and the obligation to pay electricity tax monthly will be removed.