In general, it applies that if the tax authority makes an additional tax assessment based on a tax audit, the additionally assessed tax is payable within 15 days of the delivery of the ruling on the appeal. Therefore, the tax authority is not allowed to collect the tax until after the appellate proceedings have ended when the payment assessment comes into force. However, if the tax is secured by a payment security order in advance, the tax authority has so far believed that the additional payment assessment may constitute grounds for a tax distraint as early as on the date it is delivered, ie regardless of the appeal filed. At that moment, the payment security order ceases to be effective, with the tax authority proceeding to perform the distraint and recovering the tax payable based on a payment assessment.

However, in its latest ruling on the case of the Moravian company AB Chemitrans, the Supreme Administrative Court ruled that additionally assessment tax may only be recovered by distraint until after the appellate proceedings have ended with legal effect, which also applies to situations where a payment security order has been issued in the case in hand.

The legal opinion may have several practical implications. First, it may be inferred that payment security orders do not cease to be effective until after the appellate proceedings have ended with legal effect. Therefore, if, in the meantime, the appellate body or court revokes the payment security order for unlawfulness, the tax authority will be forced to refund the secured amount. The ruling may also affect the unlawfulness of the tax distraints already underway. In this regard, the issue of interest on unlawful acts, which the tax authority should pay to companies in situations like these, will also come into play.

The article is part of dReport – May 2018, Tax news; Grants and investment Incentives