Government approves amendment to Tax Procedure Code and deletes problematic proposals
At the end of August, the government approved a comprehensive amendment concerning tax and customs administration, which also changes the related procedural rules in the Tax Procedure Code. Based on comments from the Chamber of Tax Advisors, the three most problematic changes were deleted. The amendment will now be discussed by the parliament.
The amendment to the Tax Procedure Code, which we discussed here, intended to introduce some problematic changes (the fiction of being notified regarding certain electronic messages, changes to the taking of evidence, and an extended information obligation for legal and natural persons). As these changes would be unfavourable for taxable entities, the Ministry of Finance agreed to delete them from the bill during the comment procedure.
The amendment to the Tax Procedure Code is part of a partial reform of the customs administration. In addition to the changes related to this reform, the amendment contains several other changes that respond to practical developments in tax administration and related case law:
- changes to interest and penalties:
- following recent case law, the possibility of anatocism (the charging of interest on interest) is ruled out as a general rule for all types of interest
- the possibility for the tax administrator to waive penalties in full (currently a maximum of 75% of penalties can be waived individually)
- mass waivers of tax and related penalties and interest or tax deferment will be implemented by a government notice based on a proposal of the Minister of Finance
- introduction of a possibility to file an appeal against the tax administrator's decision in proceedings on the taxable entity's objection
- clarification of the procedure when the Supreme Administrative Court reverses a decision of the regional court
- clarification of a procedure to cancel a tax registration, which is done through a notification of a change in registration data
- introduction of rules for the administration of a tax liability and the transfer of the tax liability upon the dissolution of a trust (the tax liability passes proportionally to the person who received the assets in connection with the dissolution of the trust)
- changes to service/delivery of documents to addresses abroad
- clarification of the structure of a tax submission through a prescribed form (difference between the content structure of the submission set out by the decree and the data structure of the submission set out and published by the tax administrator)
- changes to enforcement procedure under the Tax Procedure Code (subsidiary use of the Code of Civil Procedure, introduction of new concepts such as an additional bid exceeding the highest bid at an auction (předražek), a list of assets according to records, protected accounts, or seizure of virtual assets).
Most provisions of the amendment are proposed to come into force on 1 July 2025, while some of them will not become effective earlier than 1 January 2026. The government approval is only the first step in the legislative process, with the first reading in the chamber of deputies expected to take place in mid-September.