In its July 2023 decision, the Supreme Administrative Court ("SAC") upheld the existing case law stating that a taxpayer is not entitled to interest on an incorrectly assessed tax if the taxpayer paid the tax before the date of the substitute due period (i.e. before the additional payment assessment became final).
Factual circumstances of the case
The tax administrator assessed the taxpayer with additional payment assessments for value added tax for the tax period from January 2013 to July 2015. The tax assessed, including the related penalty, amounted to more than CZK 28 million. The taxpayer paid the amount of CZK 28 million before the additional payment assessments were cancelled by the appellate authority due to the expiry of the time limit for assessment. Subsequently, the tax administrator refunded the overpayment to the taxpayer and decided that the taxpayer was not entitled to interest on the incorrectly assessed tax.
Assessment of the case by the SAC
In its judgment, the SAC recalled that the right to interest on incorrectly assessed tax arises under the Tax Code only if the taxpayer has paid a tax that has been validly assessed and subsequently revoked. While it is true that an appeal against an additional payment assessment does not have a suspensive effect, it must also be taken into account that the additional tax is payable only within the substitute due period, i.e. within 15 days from the date of the decision becoming final. If the taxpayer has paid the tax before the substitute due date, the taxpayer has done so voluntarily and is not entitled to interest on the incorrectly assessed tax.
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