In June, the Supreme Administrative Court (“SAC”) dealt with a dispute concerning the reopening of proceedings for the assessment of a complainant’s personal income tax for the tax period of 2015-2017 in a situation, where the complainant had succeeded in proceedings concerning facts of the same legal nature for the tax period of previous years. The appeal proceedings were closed under reference 7 Afs 232/2023-22.

The complainant succeeded in defending the tax deductibility of the claimed deductions of non-taxable parts of the tax base pursuant to Section 15(3)(a) of Act No. 586/1992 Coll., on Income Taxes (“ITA”), consisting of interest paid on a mortgage loan. The proceedings concerned assessing if the property which, is the subject of the mortgage loan, is intended for family recreation or for his own residential use.

However, for the taxable periods of 2015-2017, both the subjective time limit for filing a motion for leave to reopen proceedings and the objective time limit for granting permission to reopen proceedings have meanwhile expired. The start of the subjective period is derived from the legal force of the judgment of the Supreme Administrative Court (SAC) No. 1 Afs 133/2019-34 of 29 June 2020, since it was this judgment that the complainant considered as a reason to reopen the proceedings. The application for permission to reopen the proceedings was subsequently made only on 29 November 2021, i.e. after the expiry of the statutory six-month period. The objective time limit coincides with the time limit for the assessment of the tax, which also expired before the application was submitted.

The complainant did not dispute the expiry of the time limits, but disagreed in substance with the procedure, whereby the tax administrator discontinued the proceedings instead of making a new decision on the matter. However, the decision contested in the action was not the procedure concerning the deductibility of the deductions from the tax base, but compliance with the time-limits for the application for permission to reopen proceedings.

According to the SAC, the contested decision was issued in compliance with the law, as the reopening of proceedings is not applied to remedy legal but factual defects. The Court found no factual defects in the present case. The alleged ground for the reopening of the proceedings was solely the subsequent judgment of the Supreme Administrative Court, but the issuance of a new legal assessment does not mean that new facts in the proceedings or evidence came to light, which could not have been adduced earlier in the proceedings. The complainant was also accused of a gradually declining passive approach, which the complainant justified by his expectation that the tax authorities would correct their actions ex officio.

The SAC concluded by agreeing with the Regional Court and dismissed the appeal as unfounded in view of the above.