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Dentons Wins Important Tax Case for Sev.en EC in Czech Supreme Administrative Court

Dentons Wins Important Tax Case for Sev.en EC in Czech Supreme Administrative Court

Czech Republic

Dentons has successfully represented Sev.en EC, a.s., a member of the Czech Coal group, before the Supreme Administrative Court of the Czech Republic in what the firm calls "extraordinary litigation" related to the reimbursement of gift tax from the Czech state that was imposed on the free carbon dioxide emission allowances in 2011 and 2012 in breach of EU law.

The Czech Coal group includes Severni Energeticka, Elektrarna Chvaletice and other companies, and is one of the largest producers of coal and coal-based electricity in the Czech Republic.

According to Dentons, "the Supreme Administrative Court decided the case in favor of Sev.en EC, and ordered the tax authority to return the illegal tax and pay almost 15% in interest on the due amount. The ruling sets an important precedent, which will affect many operators throughout the Czech Republic. The case was strongly driven by EU law, as the illicit tax was a result of a wrongly transposed Directive. The Court ruled the that the tax authority is obliged to know all legal norms on which the tax is based, including EU law, and in case of discrepancies, it is obliged to disregard national tax regulation in favor of directly applicable EU law. Therefore the conduct of the tax authority was indeed illegal and it has to be remedied through the award of interest."

Dentons Partner Petr Zakoucky, Head of the the firm's Energy group in Prague, led the team handling the case, supported by Associates Barbora Obracajova and Michal Pelikan. According to Zakoucky, “the litigation included several unique aspects, never before litigated before the Czech courts. The Court’s ruling sets a significant precedent, which will hopefully influence the operations and conduct of Czech tax authority. This applies not only with respect to emission allowances, but also for the entire tax system in the Czech Republic.”

Czech Republic Knowledge Partner

For more than 25 years PRK Partners has been providing top tier, comprehensive legal services in all areas of law – always at the highest professional level. The company’s offices in Prague, Ostrava and Bratislava, as well as its specialised teams of legal practitioners and tax advisors, allow PRK Partners to offer solutions to any kind of legal issues, providing an international point of view and in-depth knowledge of the respective local legal system.

The full-service law firm has worked on many of the region’s largest and most complex transactions. The firm puts emphasis on the highest standards of quality, efficiency and flexibility in its advisory services, which are tailored to the specific requirements of each client. 

Our team is composed of professionals with international education and experience. The firm frequently works on a non-exclusive basis with leading international law firms on large cross-border transactions.

PRK Partners is consistently recognised among the top law firms by leading international and domestic directories and ratings agencies and has been honoured with numerous awards: 

• National Law Firm of the Year 2016 by the Chambers Europe Awards, the most prestigious international law firm competition. This is the fifth award PRK Partners has received since the awards were first given; National Law Firm of the Year 2014, 2013 and 2010 and Law Firm of the Year 2012 for Best Client Service.

• 2018 Best Law Firm of the Year in the category of Banking &Finance and the absolute winner in the main category of the Domestic Law Firm of the Year awards organised by epravo.cz under the auspices of the Czech Bar Association three times since the award's inception (in 2016, 2013 and 2011).

• a finalist of the Central European Law Firm of the Year category in The Lawyer European Awards 2018. 

The firm has a strong commitment to corporate social responsibility and pro bono work.

PRK Partners is the exclusive member firm in the Czech Republic for Lex Mundi, the world’s leading network of independent law firms, with in-depth experience in 100+ countries worldwide. In addition, the firm is a member of Celia Alliance, AFI (Association for Foreign Investment) and CVCA (the Czech Private Equity and Venture Capital Association).

Firm's website: www.prkpartners.com

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