SAC on taxation of biogas in biogas stations

The case (7 Afs 160/2024-47) concerned a company operating a biogas station. The main question was whether biogas produced and consumed by the company itself in the production of electricity and heat is subject to gas tax under the Act on the Stabilisation of Public Budgets. The company argued that biogas is only an intermediate product in the production of electricity and should not be taxed.

The SAC upheld the lower court's decision that biogas is indeed subject to tax because it is used as fuel for the stationary engine of a cogeneration unit that produces electricity and heat. The key point was that the law does not distinguish between the technologies used to consume biogas: the obligation to declare and pay tax arises based on the consumption of biogas itself.

According to the SAC, the tax exemption applies only to the portion of gas used to generate electricity and not to the portion used to generate heat. The SAC also stated that the taxation of gas used for heat production is not excluded by the technical nature of cogeneration units producing electricity and heat simultaneously. Under EU law, it is possible to exempt from tax the portion of gas used to produce electricity, while taxing the portion used to produce heat. Czech law also allows for this separation for tax purposes.

The SAC dismissed the taxpayer's cassation complaint and concluded that biogas produced and consumed in a biogas station (i.e., the portion used to generate heat) is subject to tax under Section 4 of the Act on the Stabilisation of Public Budgets, regardless of the fact that it is only an intermediate product in the production of electricity from biomass. The SAC expressed a similar opinion in case 4 Afs 148/2024-51 where the taxation of biogas in connection with a cogeneration unit was dealt with in a similar manner.