Czech lawmakers approve windfall tax on energy firms, banks

PRAGUE, Nov 4 (Reuters) – Czech lower house lawmakers have approved a 60% windfall tax on energy firms and large banks, backing government plans to take firms’ excess profits to fund billions of euros in measures to ease the impact of soaring electricity prices.

The tax will apply from 2023 for a period of three years. The bill must still get Senate approval.

Electricity prices in Europe have soared this year in the wake of Russian’s invasion of Ukraine and subsequent reduction in Russian gas supplies.

The centre-right government is looking to take extra profits from energy groups such as majority state-owned utility CEZ CEZP.PR and from banks who have seen earnings rise as the central bank hikes interest rates to tame inflation at a three-decade high.

The proceeds will go to funding government measures such as an electricity price cap for households and small businesses, along with aid for industry which is also suffering amid soaring utility bills.

The government aims to raise around 85 billion crowns ($3.40 billion), or about 1.2% of gross domestic product, from the tax next year, and smaller amounts in 2024 and 2025.

It will apply to profits exceeding 120% of the 2018-2021 average and be applied on top of the standard 19% corporate tax rate.

It will hit mainly large energy production and trading firms.

Besides CEZ, it will hit refinery ORLEN Unipetrol and the country’s largest six banks: CSOB , Ceska Sporitelna , Komercni Banka , UniCredit , Raiffeisenbank and MONETA .

The Czech tax goes beyond European Union regulation as it includes electricity producers, which will already be affected by price caps on wholesale electricity prices, and also banks. It is also planned for three years and not just for 2022-2023 as set in the EU agreement.

($1 = 25.0010 Czech crowns)

(Reporting by Jason Hovet and Jan Lopatka; Editing by Emelia Sithole-Matarise and Alison Williams)