How quickly shall tax authorities refund overpayments or excess deductions?
Not only taxpayers but also tax administrators must comply with deadlines. What deadlines apply to the tax authority when refunding taxpayers? What can taxpayers do if the tax authority fails to meet the relevant deadline? Below we present an overview of important deadlines.
Deadline for refunding refundable overpayments: The taxpayer may request the tax administrator to refund an overpayment. The tax administrator shall grant the request if the overpayment amounts to at least CZK 200 at the time of filing the request or shall reach this amount within the next 60 days. Conversely, the request shall not be granted if a tax liability arises in the taxpayer's personal tax account within one month or if the refundable overpayment has arisen because of the payment of a tax that has not been finally assessed or an alternative due date has not passed.
The tax administrator has 30 days from the date of receipt of the request to refund the overpayment. However, if a taxpayer applies for a refund of an overpayment of income tax when filing an income tax return before the filing deadline, the 30-day period shall not start to run until the day following the last day of the period for filing the tax return.
Deadline for refunding an excess VAT deduction: Unlike a refundable overpayment, the taxpayer does not have to request the tax authority to refund the overpayment resulting from the assessment of a VAT deduction. The tax authority is obliged to refund it without being requested, within 15 days from the date of notification of the order to pay tax or additional order to pay tax, or within 30 days where the result of the tax assessment or additional assessment is not subject to notification.
Deadline for refunding overpayments in specific cases: If a refundable overpayment arises as a result of cancellation, modification, expiry or annulment of a decision assessing tax or a securing order, or as a result of an unjustified recovery process, the tax administrator is again obliged to refund the overpayment without being requested, within 15 days of the effective date of the decision giving rise to the overpayment.
Taxpayers must also pay attention to deadlines in these cases. If the taxpayer does not apply for a refund within 6 years from the end of the year in which the overpayment arose, the overpayment ceases to exist and becomes the state budget’s revenue. Whereas if the taxpayer is not interested in the refund of an overpayment that the tax administrator is obliged to return without a request, then the taxpayer may request the tax administrator not to do so.
If the tax administrator does not return the overpayment within the above time limits, the taxpayer is entitled to interest on the refundable overpayment, currently amounting to the CNB repo rate plus 8%, i.e., 15% per annum.