VAT stated in a tax document for a fictitious transaction must be paid

In 8 Afs 21/2014-30 case, the Supreme Administrative Court (SAC) corrected the regional court’s interpretation of Section 108(4)(f) of the VAT Act. The provision stipulates that the person issuing a tax document indicating tax is also obliged to declare that tax in their VAT return.

The SAC dealt with a dispute where during a tax inspection received tax documents were found in which VAT was indicated and based on which VAT was deducted. The tax rate and the tax amount indicated in the documents were handwritten. A follow-up review at the supplier, i.e. the entity that had issued the tax documents, found that the supplier had not included these documents with the indicated Czech VAT in their VAT returns. An expert’s opinion subsequently proved that the data in the tax documents had been handwritten by the issuer.

In the SAC’s opinion, the regional court had based its assessment of the case and its interpretation of the VAT Act on the wrong assumption that the provisions of Section 108(4)(f) only applied to cross-border transactions. According to the SAC, this assumption has no basis in the VAT Act or in EU legislation, therefore the provision is also applicable to domestic transactions.

The SAC also discussed whether the legal provision in question requires it to be proved with absolute certainty that the taxable supply declared in the tax document was effected. Referring to the case law of the Court of Justice of the EU, the SAC concluded that the assessment of additional VAT was not conditional upon proving with certainty that the taxable transaction was effected.


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