Case law
16 February 2018

SAC: tax inspections can be initiated by any tax authority

The 2016 amendment to the Act on the Financial Administration gave tax authorities country-wide jurisdiction in two areas: the fact-finding activity in tax administration, and the scrutiny procedures by the tax authorities, including tax inspections.

Veronika Červenková
Karolína Tomsová

Before the Supreme Administrative Court (SAC) was the case of a company with its registered office in Prague, where the tax authority for the Vysočina region tried to initiate a tax inspection. The company objected, eventually filing a lawsuit with the regional court.

The company believed that its taxes may only be inspected by a tax authority in whose “district” it has its registered office; it also argued that should the tax authorities have country-wide jurisdiction, a tax inspection could be carried out at a single taxable entity by an unlimited number of tax authorities at once; this would constitute inacceptable harassment by financial administration.

The SAC disagreed with the plaintiff. It pointed out the difference between the general regulation in the Tax Procedure Code, and the ‘selected jurisdiction’ introduced by the 2016 amendment to the Financial Administration Act; the latter gave the financial administration country-wide jurisdiction in two areas: the first one being the fact-finding activity in tax administration, the other being the scrutiny procedures by the tax authorities, which also includes tax inspections.

The SAC also dealt with the issue of several tax inspections being carried out by a number of tax authorities at a single tax entity. In this respect it pointed out that such a situation is excluded by law. Although a tax inspection can indeed be carried by any tax authority of the Czech Republic, there is no need to worry that taxable entities would be terrorised by the financial administration by an uncontrollable maelstrom of tax inspections – this would be contrary to the principle of helpfulness and decency.

 

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