At the end of 2013, the Supreme Administrative Court delivered a resolution (1 Afs 76/2013 – 60) that brings hope to owners/operators of PV power plants. According to the resolution, the government is to waive the solar tax for PV power plant owners/operators on whom the tax has a devastating effect.
The Supreme Administrative Court has concluded that, under the currently applicable laws, the only method of dealing with the “strangling effect” of the solar tax is to waive the tax. According to the Supreme Administrative Court, the solar tax has a jolting nature that, in theory, can have devastating effects on the ability of producers to meet their obligations that are otherwise discharged on an ongoing basis and that were established before the act imposing the tax took effect. As a result, the Supreme Administrative Court is of the opinion that the legislature can be requested to provide a regime that allows an individual approach to producers. Given the fact that the solar tax as such was not held unconstitutional in a previous judgment by the Constitutional Court, it is, for the time being, up to each particular owner/operator to prove that the solar tax (or other changes) has a strangling effect on their power plant business. If the strangling effect can be demonstrated, the PV power plant operators may seek a waiver and hence a refund of the tax.
In the past, the solar tax was subject to review by the Constitutional Court. In its judgement of 15 May 2012 (File No. Pl. ÚS 17/11), the Constitutional Court held that the introduction of the solar tax in general was not unconstitutional. However, at the same time, the Court stated that an important criterion was whether the support would be maintained after introduction of the solar tax to ensure that the plants would be able achieve the guaranteed return on investment per electricity unit with the support in the form of feed-in tariffs throughout a period of 15 years, and at the same time, whether the 15 years’ period of return on investment would remain guaranteed. Nevertheless, the Constitutional Court admitted and recommended reflecting that the introduction of the solar tax could have infringed upon the producer’s estate, that is, that the solar tax had a strangling effect.
The introduction of a 26 (28) per cent solar tax on power plants put into operation in 2009 and 2010 was approved in an amendment with effect from 2011. The solar tax was to be imposed for 3 years on electricity generated from solar energy in 2011 to 2013. However, last year, the legislature extended the applicability of the solar tax to power plants put into operation during 2010 to the entire period of receiving the support, at the rate of 10 (11) per cent of revenue.
The last year’s judgment of the Supreme Administrative Court is very important and raises the hopes of a large number of solar investors. In our experience, it is crucial to convincingly prove that the state’s guarantees have been breached. RSM TACOMA Valuation is qualified to provide expert valuations in the field of economics and can therefore verify the efficiency of a PV power plant’s operation in an independent opinion. If compliance with the necessary criteria is demonstrated, we are ready to prepare an expert opinion to serve as strong evidence for administrative proceedings/litigation.