In several current judgments, the Supreme Administrative Court has dealt with calculating the statutory deadlines for determining tax in connection with a tax audit. According to the relevant provisions of the Tax Code, the initiation of a tax audit interrupts the statute of limitations for determining tax and the period runs anew for the following three years.
According to the long-term interpretation of the tax administration, even in the case of a statute of limitations for determining tax interrupted by a tax audit, the Tax Code’s general rules for time calculation apply. According to these general rules, the period begins to run on the day following the date on which the facts decisive for the beginning of the period occurred. At the same time, according to these rules, the end of the period will be postponed to the next working day, should it otherwise fall on a weekend or a holiday.
In the cases assessed, the tax administration had to defend its interpretation because it issued additional tax assessments only at the very end of the statute of limitations for determining tax it had calculated and the tax subjects challenged its interpretation within administrative justice.
Supreme Administrative Court’s interpretation
The Supreme Administrative Court upheld the tax subjects’ appeals and rejected the misinterpretation of the tax administration. The provisions of the Tax Code governing the interruption of the statute of limitations for determining tax by a tax audit are special in relation to the general rules. These special rules explicitly state that the statute of limitations for determining tax runs again from the date on which the action, i.e. the initiation of the tax audit, was taken. Thus, in that provision, the legislator clearly expressed the moment from which the new statute of limitations runs, i.e., from the specific date on which the tax audit was started and not from the following day.
Referring to its earlier case-law, the Supreme Administrative Court also stated that the tax administrator’s ability to assess tax ends upon the expiry of the last day of that statute of limitations, which falls on a specific date determined by law. If the end of the period falls on a day of rest or a holiday, the right to assess tax shall expire on that day, irrespective of the general rules governing the shift to the following working day.
In the cases assessed, according to the interpretation of the Supreme Administrative Court, the deadline for determining tax had narrowly expired, so the additional tax assessments were issued illegally and as such were cancelled.
In the light of the abovementioned case-law of the Supreme Administrative Court, it is clear that, in the case of a tax audit, the statute of limitations for determining tax begins on the date on which the tax audit is started and not on the following day. At the same time, this period shall end on a date which numerically corresponds to the date of commencement, irrespective of whether it falls on a day of rest or a holiday.
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