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Czech Republic: Proposed amendment changing depreciation of photovoltaic power plants

Proposed amendment awaits approval by the lower house of Parliament

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February 13, 2025

A proposed amendment to the Income Tax Act included in proposed legislation amending the Energy Act would abolish the special method of depreciation of the technological parts of photovoltaic power plants. Under the amendment, the technological parts of photovoltaic power plants would be treated in the same way as other assets (i.e., classified into depreciation groups and depreciated for tax purposes accordingly).

The upper house of Parliament (Senate) returned the proposed legislation to the lower house of Parliament (Chamber of Deputies) with certain amendments unrelated to this proposed amendment, and the proposed legislation now awaits approval by the Chamber of Deputies and is expected to become effective after promulgation in the Collection of Laws.

The proposed amendment would be effective for assets for which depreciation begins after the amendment becomes effective, but the proposed amendment includes a transition rule providing that for assets for which depreciation begins after June 30, 2024, but before the effective date of the amendment, taxpayers can choose to apply either the amended rule or existing law. 

Background

Under current rules, the technological part of a photovoltaic power plant used to generate electricity from solar radiation must be depreciated on a straight-line basis over 240 months, without the possibility of accelerated depreciation.

The amendment would restore the rules in effect before January 1, 2011.

Read a February 2025 report prepared by the KPMG member firm in the Czech Republic

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