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Czech Minister of Finance Alena Schillerová. (Alena Schillerová/Facebook)
Alena Schillerová energy price VAT czech republic News

Czech government set to drop tax on energy as prices soar

The measure, designed to help Czechs deal with soaring energy costs, has only been used in the past during extraordinary circumstances

editor: REMIX NEWS
author: Czech News Agency

On Monday, the Czech government authorized Minister of Finance Alena Schillerová to waive the Value Added Tax (VAT) on energy for November and December because of the rising energy prices. Schillerová announced the decision at a press conference after a government meeting on the issue, adding that it will cost the state budget 1 billion korunas (€39.3 million) a month. The VAT rate on energy is now 21 percent.

With this step, the government is responding to rising electricity and gas prices, which are affecting all of Europe. The typical Czech household, which pays 1,000 korunas (€40) a month for electricity, will save about 350 korunas (€14) on their bill for November and December, said Schillerová. The tax waiver is made possible by a provision in the Czech tax code that allows the Minister of Finance to collectively waive the payment of tax in the event of extraordinary events, especially natural disasters.

According to the minister, this step should be followed by an amendment to the VAT Act effective from Jan. 1, which will extend zero VAT for a necessary period of time.

The government should discuss the situation at a special meeting on Wednesday. According to Schillerová, waiving the VAT is an unusual act, which so far she has used only in the case of face masks during the pandemic. Last week, the largest Czech alternative energy supplier closed its business because of the unbearable situation in the energy market.

Households with an average consumption of up to three megawatt-hours will be also free from paying the fee for renewable resources. The amount reaches a maximum of 1,500 korunas (€59) per year. The government approved this at Monday’s meeting, as well. This measure will affect about 5.3 million consumption points, of which about 4.3 million are households. The rest are, for example, cottages and weekend houses.