Overturning financial administration decisions
The Appellate Financial Directorate has rejected your appeal and you disagree with the decision. Can you defend yourself further? Is it at all worth continuing the dispute with the financial administration? Today, we will focus on these and other issues.
When the Appellate Financial Directorate rejects your appeal against an additional tax assessment, you still may be able to reverse the result. As a taxpayer, you can contest the financial administration’s decision in court. To file such a lawsuit, the Code of Administrative Procedure stipulates a deadline of two months from the time when the decision on the appeal was delivered to you as a taxpayer.
When deciding whether to file the lawsuit, you should consider a number of factors, such as the likelihood of success, taking into account also the previous judicial decision-making practice, the financial and time demands of the litigation, the gravity of the additionally assessed tax, and whether you need to defend the tax treatment or sometimes the entire business model for future use.
Courts grant every third claim; however, you may have to wait more than two years for a result.
The statistics show that in 2021, a total of 757 lawsuits were filed against the financial administration authorities’ decisions, of which 258 were granted. Compared to other European countries, the number of disputes won is rather high, hence your chances are certainly not small.
The course and possible length of the court proceedings depend on the complexity of the case and on the court dealing with your case. The annual report of the Czech judiciary for 2021 shows that court proceedings took the longest at the Municipal Court in Prague, where the average length was 643 days. On the other hand, the Regional Court in Ostrava dealt with claims the fastest, taking an average of 281 days.
If the court concludes that a claim is justified, it will annul the contested decision and return the whole case to the financial administration for further proceedings. The financial administration will then issue a new decision which must reflect the court's conclusions. If the lawsuit is unfounded, the court dismisses it. As a taxpayer, you can then still file a cassation complaint with the Supreme Administrative Court.
Disputes with the financial administration may even earn you money
Defending yourself against the tax administrator's decision in court is therefore definitely worth considering. Moreover, few people know that the taxpayer can also benefit financially from the dispute. If, at the very end, it turns out that the additional tax assessment was contrary to the law, you as a taxpayer are entitled to interest on the incorrectly determined tax, based on the CNB repo rate. Currently, this amounts to 15% p.a.