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Court proceedings after decision on appeal

What happens in a tax dispute once the appellate proceedings are closed, and what to expect if you file a lawsuit against the Appellate Financial Directorate’s decision? In this article, we shed some light on the judicial proceedings that may follow.

Once you receive the decision on the appeal, you should promptly consider whether to continue the dispute in court, and if so, proceed with preparing the lawsuit. The two-month deadline for filing a lawsuit may seem long, but, unlike in appellate or cassation complaint proceedings, it is not admissible to file a lawsuit without the plaintiff's argumentation and statement of claims. Therefore, it is advisable to start working on it as soon as possible.

Proceedings before a regional court are governed by the principle of concentration of proceedings. This means that you may neither submit any further evidence once the deadline for filing the lawsuit expires, nor add to or expand the argumentation. In practice, it is possible to draw the court's attention to the new judgments of other courts, but completely new arguments cannot be presented. It is therefore necessary to state everything that you contest about the decision already in the lawsuit. The only thing that the court has to deal with ex officio, i.e., even if it is not stated in the lawsuit, is the expiry of the deadline for determining the tax. In all other matters, the court is bound by the claims stated, meaning that it will only deal with what is stated in the lawsuit. And this does not apply just to the regional court: the lawsuit also delineates the playing field for a cassation complaint against the regional court's judgment, as in the cassation complaint, it is not possible to come up with a new line of argumentation that has not already been included in the lawsuit.

What happens to the lawsuit after it has been filed? First, the court will send you a notice to pay the court fees, unless they have already been paid. Unlike in civil disputes, the court fee is not based on the disputed amount but is always CZK 3,000 (for any action against a decision). The court will also inform you about the composition of the panel of judges: should you have any concerns about the bias of specific judges, you may demand their exclusion from decision-making. The court will also send the lawsuit to the defendant (i.e., the Appellate Financial Directorate) for comments. If the defendant uses this opportunity, the court forwards their statement to the plaintiff and the plaintiff may also comment on it. This may be repeated several times. The court also often asks the parties to agree to issuing a decision without a hearing. The court may decide on the lawsuit without a hearing if both parties agree (at least tacitly). If the parties insist on an oral hearing, it must take place. In practice, however, it is a mere formality and judges usually form their decisions based on written submissions.

Interestingly, proceedings before a regional court do not necessarily always end with the issuance of a judgment. In practice, although exceptionally, during the proceedings and under the strength of the presented arguments and case law, the appellate body may admit that they have erred in their assessment of the case and grant the plaintiff’s claim. In such a case, the appellate body asks the court to set a reasonable deadline, reviews their decision and issues a new one to the plaintiff’s satisfaction. The court then discontinues the proceedings. Although this procedure by the appellate body is far from frequent, our tax litigation team has recently managed to achieve this result several times.