The Supreme Administrative Court (hereinafter the SAC) dealt with an appeal in cassation between an plaintiff (ADL PRANA s.r.o.) and a defendant (the Appellate Financial Directorate) concerning additional assessment of income tax on the income of a natural person from dependent work activity. The assessment of additional tax was made due to insufficient evidence of the employees’ gross wages after the tax authorities had doubts when comparing employment contracts and reported working hours.

The plaintiff submitted payroll records for 18 employees to the tax authorities. In most cases, part-time work was agreed in the employment contract and the amount of pay was agreed accordingly, which changed over time based on amendments and the mode of employment also changed. None of the declarations of the taxpayer of personal income tax from dependent activity had the box filled in, which states “I claim the basic discount per taxpayer under articles 35ba paragraph 1 letter a) and paragraph 35 letter d) of the Income Tax Act”.

The tax administrator questioned these submitted documents and pointed out specific discrepancies in the reports of hours worked in the payroll, the agreed amount of remuneration and the agreed scope of work. The plaintiff then submitted amended attendance and payroll sheets, completed by hand. Although the employees were different, the handwriting appeared to the municipal court to be uniform.

It is undisputable that the plaintiff had documents, which were seriously deficient. These deficiencies are described in detail in the tax audit report, in the defendant’s decisions and in the judgment under appeal. The complainant is aware of these gross deficiencies and does not dispute them.

Since the SAC found the appeal unfounded, it dismissed it under the terms of article 110 paragraph 1 in fine of the Administrative Procedure Code.

Author: Roman Burnus, Marek Toráč