European Financial and Accounting Journal 2023, 18(1):1-23 | DOI: 10.18267/j.efaj.278

Taxation of Financial Institutions in the Czech Republic

Veronika Síbrtová1
1 Prague University of Economics and Business, Faculty of Finance and Accounting, Department of Public Finance, Winston Churchill Square 1938/4, 130 67 Prague, Czech Republic.

This article aims to analyse possible forms of taxation in the financial sector and, based on financial institutions’ data, estimate the potential contribution to the state revenue of the Czech Republic, if the tax is levied on the banks’ assets with the progression tax rate. The exponential smoothing methods were used to predict banks’ assets for the following five years. Actual data from the MagnusWeb database and annual reports for Czech banks from 2008 until 2021 were used. This article estimates tax revenues for the Czech Republic by using the parameters of bank tax proposed by several political parties and comparing the results with the latest windfall tax proposal. Based on the results, the bank tax would represent the additional revenue of CZK 23.4–28.7 bn (0.34–0.39% of GDP) each year for the following five years, with an increasing trend for the basic scenario. The proposed windfall tax should represent the additional tax revenue of CZK 33 bn for 2023 with decreasing trend, as the tax should be temporary and levied only on excessive profits.

Keywords: Bank Tax; Excessive Profit Tax; Financial Institutions; FTT; Taxation; Windfall Tax.
JEL classification: F38, H29, K34

Published: December 31, 2023  Show citation

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Síbrtová, V. (2023). Taxation of Financial Institutions in the Czech Republic. European Financial and Accounting Journal, 18(1), 1-23. doi: 10.18267/j.efaj.278
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