Confidentiality in tax proceedings: what can tax administrator say about you, what can you not disclose to them?
Confidentiality in tax proceedings is a key principle that protects the privacy of taxpayers and ensures the confidentiality of information submitted in tax proceedings. What limits and boundaries does the obligation of confidentiality impose on tax administrators and taxpayers?
The obligation of confidentiality binds both the tax administrator and other persons involved in the administration of taxes (taxpayer, third parties, etc.). The tax administrator as well as individual officials must maintain the confidentiality of all information obtained during the administration of taxes regardless of whether it is directly related to the taxpayer.
In a broader sense, tax secrecy prohibits the tax administrator from providing information to third parties about the taxpayer and the proceedings without their prior consent. The tax administrator must ensure that the information obtained during the tax inspection is used solely for the purposes of the inspection and that no confidential and sensitive business information is leaked from the tax proceedings. However, the obligation of confidentiality does not apply to information that is publicly known or available to the public from public administration information systems.
On the other hand, the taxpayer may also submit information and data of another taxpayer in tax proceedings if the other party agrees. Similarly, the taxpayer may submit information from their tax proceedings to another taxpayer or publish it, for example, in the media, but only on the condition that this information does not contain data and information about other taxpayers.
Breaches of confidentiality are fined up to CZK 500,000. You may sue for damages.
A breach of confidentiality is an offence that can only be committed by a natural person. The penalty for a breach of confidentiality is a fine of up to CZK 500,000. However, the injured person (taxpayer) may claim compensation for damage caused by a breach of confidentiality in court, e.g., in connection with the disclosure of trade secrets or other damage (reputational, competition, etc.).
In practice, the tax administrator often takes information from various tax inspections, e.g., when checking supply chains as part of the VAT fraud investigation. The tax administrator may, e.g., take over information on the declaration of supplies or on the payment of tax. Such information should be anonymised, and sensitive data should not be shared.