Tax administration activities

The General Financial Directorate (GFD) issued guideline no. D-67 on waiving tax accessories, which ‎came into effect on March 1, 2025. The guideline includes detailed conditions and procedures for ‎waiving fines, penalties, and interest. Among other things, the guideline states that if a taxpayer ‎submits a tax return late but without a prior notice from the tax authority, up to 50% of the total ‎amount of the assessed penalty may be waived. We believe this is a new approach by the GFD to ‎waiving fines.‎

The next Coordination Committee of the GFD and the Chamber of Tax Advisors of the Czech ‎Republic will address contributions related to the issuance of tax documents from January 1, 2025, ‎based on § 28 paragraph 10 of the VAT Act and the issue of the tax rate for the delivery of a unit that ‎does not include space other than space for social housing and which is not completed. It is also ‎expected that the postponed contribution regarding the assessment of damages for stolen goods ‎from a VAT perspective, which was delayed in the past, will be discussed. The discussion of these ‎contributions should take place at the end of April 2025.‎

Judgements of the CJEU

• In case C-640/23 Greentech SA, the Court of Justice assessed the entitlement to deduct tax on ‎improperly invoiced VAT. A transfer of production equipment occurred between related parties, the ‎supplier paid the VAT, and the buyer claimed a tax deduction. However, the tax authority determined ‎that the transaction did not fall under VAT as it was a transfer of part of a business, and thus denied ‎the deduction. The Court ruled that the tax deduction can indeed be denied, even if the supplier no ‎longer has the option to correct the tax and the recipient cannot reclaim the paid VAT from the ‎supplier. However, the buyer must be allowed to request the direct return of unduly charged VAT ‎from the tax authority. This view aligns with the older case law of the Court, and we believe the case ‎should not affect practice in the Czech Republic.‎
• In the opinion for case C-808/23 Högkullen, the Advocate General of the Court of Justice of the EU ‎assessed the determination of the tax base for services between related parties. A holding company ‎charged its subsidiaries fees for provided services, which did not cover all its costs. From the amount ‎of these fees, the holding company claimed VAT deductions from the total taxable costs. However, ‎the tax authority assessed output VAT, setting the tax base at the holding company’s total costs. The ‎Advocate General assessed that the tax base for these services should be set at the usual market ‎price, if possible. In cases where this is not possible, the tax authority’s approach is acceptable but ‎with certain limitations (such as including only part of the long-term investment expenses).‎