The Appellate Financial Directorate in Brno continues a dispute with a taxpayer regarding the obligation to revaluate prepayments relating to tangible assets as of balance sheet date. The situation originated in the taxable period of 2012/2013, when the taxpayer did not revaluate the mentioned prepayments, referring to the fact that he did not consider prepayments for non-current assets a receivable.

In the current dispute, the taxpayer complemented the action in the year 2021 with the Interpretation of the National Accounting Council no. I-43, which deals with the issue of foreign-currency prepayments.

Ústí nad Labem regional court argued that neither the Accounting Act, not the Income Tax Act or the Code of Tax Procedure contain a definition of a receivable. When assessing the matter, it is therefore necessary to work based on civil obligation law. In its decision (15 Af 84/2017), the Regional Court extensively justified, why it does not consider a paid prepayment a receivable in the given case, and agreed with the taxpayer that he proceeded correctly when not re-valuating the receivable.

Nevertheless, the Financial Directorate disagrees with this decision and has submitted an appeal in cassation to the Supreme Court against the decision. The case will therefore continue. We will keep you informed about further development.