In the middle of the summer holidays, an amendment of the VAT act took effect, which brought several minor changes in relation to submitting a control report. These changes were mainly brought about by the fact that tax consultants and representatives of the entrepreneurial sector kept pointing out the illogicality and strictness of some sanctions and deadlines, which are connected to submitting a control report. The finance ministry admitted this January already that some deadlines and sanctions are too strict and has promised their liberalisation. 

This article deals with what the finance ministry understands as the meaning of liberalisation from the viewpoint of the approved amendment of the VAT. 

THE SO-CALLED LIBERALISATION IN THE CASE OF PROLONGATION OF DEADLINES

The original version of the VAT act

According to the stipulation of article 101g, paragraph 3 of the VAT act in the version prior to the effect of this amendment, the taxpayer has a duty to change, supplement incorrect or incomplete data or confirm the original data within 5 calendar day from the summons regarding a submitted control report, and to do so by means of a subsequent control report. 

VAT amendment

According to the amended version of the stipulation of article 101g, paragraph 3 of the VAT act, this duty is “prolonged” to 5 workdays from the summons. 

In other words, the Czech lawgiver has shown his “generosity” and provided the taxpayers with one or two days more, at best, for reacting to the summons, which, moreover, may not even be caused by a mistake of the respective taxpayer, but perhaps his supplier or customer. Chief accountants or other employees, who are in charge of processing and submitting control reports in companies, will certainly not sleep any better during a one-week holiday. 

THE SO-CALLED LIBERALISATION IN THE CASE OF A FINE OF CZK 1,000

The original version of the VAT act

According to the stipulation of article 101h, paragraph 1, letter a) of the VAT act, the taxpayer has a duty to pay a fine of CZK 1,000, if he does not submit the control report within the set deadline, but submits it additionally without being summoned to do so. 

If a control report is thus not submitted within 25 days after the end of a given month (in some cases within 25 days after the end of a given quarter of the year), a fine of CZK 1,000 arises for the taxpayer. Here it is necessary to point out the fact that in case of a belated submission of a control report and the infliction of a fine of CZK 1,000, the well-known protective deadline does not apply, which is based on the code of tax procedures and relates to the infliction of late payment interest or a fine for belated submission of a tax declaration. 

VAT amendment

According to the stipulation of article 101j of the amended VAT act, the duty of paying the above-mentioned fine does not arise, if the taxpayer did not have any other delay in submitting a control report in that calendar year. 

In other words, the Czech lawgiver has shown his “generosity” and provided the option of one pardon to the taxpayers. But beware – if, for example, the taxpayer has a problem with connection to the Internet at the beginning of the calendar year and the control report is submitted a day after the deadline, no other wavering on the part of the taxpayer will be tolerated by the tax administrator. 

If another delay occurs in the case of this taxpayer in the course of the year (even if by a mere day again), the directly legally enforceable fine of CZK 1,000 arises. 

In this case, it will not be possible to request immunity from a fine for not submitting a control report, which we will discuss in the text that follows. 

THE SO-CALLED LIBERALISATION IN THE CASE OF A FINE OF CZK 10,000, CZK 30,000 AND CZK 50,000.  

The original version of the VAT act

According to the stipulation of article 101h, paragraph 1, letter b), c) and d) of the VAT act, a duty arises for the taxpayer to pay a fine of 

• CZK 10,000, if he submits a control report within an additional deadline, after having been summoned by the tax administrator to do so;
• CZK 30,000, if he does not submit a control report based on the summons for change, completion or confirmation of the data stated in the submitted control report;
• CZK 50,000, if he does not submit a control report even within the additional deadline. 

VAT amendment

According to the stipulation of article 101k of the amended VAT act, the taxpayer will have the option of requesting immunity from the above-mentioned fines from the tax administrator. In these situations, the taxpayer will have the option of completely or partly granting this request, if, however, the below-mentioned conditions are fulfilled, among other things:

• The non-submission of a control report occurred for reasons, which can be justified when taking into account the circumstances of the given case; 
• This request is filed within 3 months from the order of payment taking effect;
• The taxpayer pays an administrative fee of CZK 1,000 when submitting the request

What is meant by the < -em data-mce-fragment="1">“reasons, which can be justified when taking into account the circumstances of the given case” is further specified in the instruction from the General Financial Directorate no. D-29. This instruction has 10 pages and in some areas, it refers further to another instruction no. D-21, on remission of tax accessories. 

In other words, the Czech lawgiver has shown his “generosity” and provided taxpayers the option of submitting a request for immunity from selected fines. 

Nevertheless, the time for preparing, drawing up and submitting this request may take up even several hours of time for tax specialists, and compliancy with the request on the part of the tax administrator will not be guaranteed for the tax payer. In some cases, the situation may even occur that the tax payer will pay an administrative fee of CZK 1,000 and the submitted request will be rejected completely.

The much promised “liberalisation” of deadlines and fines in connection with the submission of a control report is, in our opinion, more of a “symbolical gesture”, which does not add much comfort to taxpayers at a time, when the demands on the amount and quality of data and information required by the law continues to increase. 

If you wish to receive more information about this issue, or if you need help with preparing a request for immunity from a fine for not submitting the control report, please, do not hesitate to turn to us.