May tax administrators use traffic camera information on vehicle movements?
Following the Constitutional Court’s intervention, the Supreme Administrative Court (SAC) again assessed whether an administrator may for the purposes of specific tax proceedings request records on the movement of a vehicle from the Police of the Czech Republic. The SAC had first concluded that the tax administrator's procedure had been acceptable. However, the Constitutional Court disagreed and overturned the SAC’s decision. The second time around, the SAC then also concluded that the tax administrator did not have the right to use police camera footage against the taxpayer.
A dispute arose between a taxpayer and a tax administrator over the right to deduct VAT on a purchased car. The tax administrator challenged the vehicle being used for business purposes as claimed by the taxpayer: the tax administrator's doubts were raised by an inaccurate logbook, which, furthermore, did not match up with the records of the vehicle's movements obtained by the tax administrator from the Police of the Czech Republic. The taxpayer, however, argued that the tax administrator was not allowed to request information from traffic cameras from the Czech Police and use it in the tax proceedings.
Initially, in the proceedings before the administrative court, the taxpayer was unsuccessful with this argumentation (we reported on the outcome of the court proceedings before the SAC here.) The turnaround came when the taxpayer filed a constitutional complaint against the SAC’s judgment. The Constitutional Court upheld the complaint: according to the Constitutional Court, the SAC should have dealt with the question of whether the police were allowed to provide data on vehicle movements to tax administrators at their request. If so, according to the Constitutional Court, the SAC should have further assessed whether, in the given case, the state's interest in the correct assessment of tax (VAT deduction) outweighed the infringement on the taxpayer's fundamental rights, in particular the right to privacy and informational self-determination.
Although, according to the SAC, it is legally possible for the Police of the Czech Republic to provide tax administrators with data on the movement of vehicles, in the case at hand the tax administrator should not have requested them, as this was not necessary for the correct assessment of the tax. The fulfilment of the ‘necessity’ criterion is required by the Tax Procedure Code (in conjunction with the Police Act), which governs the exchange of information between the tax administration authorities and the Police of the Czech Republic. Since in the given case, the tax authorities could have challenged the right to deduct VAT in a less invasive way, they did not fulfil the 'necessity' criterion. The SAC thus annulled the tax administrator’s decision. In the subsequent proceedings, the tax administrator will no longer be able to use the records of the movement of the taxpayer's vehicle.