The Constitutional Court has concluded on a proposal for revoking several sections of Act on VAT  concerning control statements (CS) and penalties for violations in regard to the obligation of submitting CS. The Court has dismissed most of the proposals submitted by a group of senators regarding disputed provisions. Only one provision was dismissed effective immediately; the provision regarding formal notices sent out by the tax administration via e-mail only. According to the judges, such notices are not reliable and would make it possible for subjects to be fined for a breach of law that they have not been informed about.

Further, the Constitutional Court limited the validity of provision § 101d section 1 of Act on VAT according to which the taxpayer is obliged to give necessary information for the tax administration for reason of unclarity.

The General Financial Directorate reacted with an Appendix to Direction D-29 which adds to a list of justifiable reasons which may lead the tax administration to decide about remission of part of or the whole penalty. New reasons include maximum of two instances of error with listed penalties (only errors which happened in 2016), taxpayer’s reaction to a formal notice after the end of a prolonged period (but latest within 5 days after the period has expired and without having been obliged to submit a CS), if a taxpayer does not respond to a formal notice but their CS is in order, if a taxpayer submits a subsequent CS within 5 days after the end of a period given by formal notice, or in a case where the tax administration has sent the formal notice via e-mail.

Two criteria

There are two criteria for the assessment of the scale of a penalty remission for not submitting a CS: justifiable reason for delay (§ 101k. sec. 2 Act on VAT) and numerousness of breach by the tax subject (§ 259c sec. 1 Tax Code). Up to 100% of the penalty can be forgiven. The administrative fee for requesting remission is 1 000 CZK.