With effect from January 1st 2015 the legal regulation concerning remission of the individual tax appurtenance was adopted. This is encouraging news for the most of taxable entities as from January 1st 2011 when the Act no. 280/2009 Coll, Tax Code (hereinafter referred as „Tax Code“), came into force, it was not allowed to them to forgive. The old regulation of the Act on Administration of Tax and Fees made this possible before, therefore the possibility to submit applications for remission of tax appurtenance is back in game.

The General financial directorate released directions concerning the term of remission of tax appurtenance D-21 under reference no. 4260/15/7100-40123 containing more precise information on the specified area.

At the beginning it is necessary to realize what is understood with the tax appurtenance, with respect to the Tax Code. It involves interest, penalties, fines and procedure costs (under the Tax law). However, the remission involves only interest on late payment and on the deferred tax and then penalty.

It is possible to submit application for remission of tax appurtenance from January 1st 2015. In case of penalty it concerns sums when the penalty was announced by an additional payment assessment after including January 1st, 2015. When it concerns interest on late payment or on the deferred amount, then it has to concern interest incurred after January 1st, 2015. In case of interest from respite incurred until December 31st, 2014, it is possible to ask for the waiving from regulation according to the cancelled § 157 Tax Code. It is possible to forgive the tax appurtenance also in case when it has been already paid. It is possible to ask for waiving a part of penalty (it is not possible to ask for the remission of 100% of penalty amount) only when the tax was paid, where, as a result of its additional assessment, a duty to pay penalty incurred.

The application for the remission of tax appurtenance is subject to the administration fee of 1 000 CZK, namely for each tax the application relates to. The exception are amounts of tax appurtenance not exceeding 3 000 CZK.

Remission of penalty

The submission of applications is bound to the observing of stipulated deadlines. It is possible to ask for the remission of penalty at the latest within 3 months from the day of the legal effect of the additional payment assessment and it is not possible to extend it.

The application has to fulfil formal requirements, and then it is only possible to start judging the application. In this phase it is thus decided whether it is possible at all to meet the application (at this moment it is not judged in which scope).

The Tax Code also regulates the exclusive condition for the possibility to forgive the tax appurtenance. When in the last 3 years a taxable entity or a member of statutory body breached flagrantly tax or accounting legal regulations, then in his case the remission of tax is not possible. The definition of a flagrant violation is stated in the directions D-21. When judging the violation of tax and accounting regulations, the tax administrator takes into account the objective reasons worthy of a special consideration which are known to him.

When the tax administrator comes to conclusion that the taxable entity fulfilled requirements of this directive and that it is possible to forgive penalty to the taxable entity, he starts judging in which scope it is possible.

The scope of remission is judged based on two criteria, namely cooperation within the procedure leading to the additional assessment of tax officially and the frequency of breaching the duties when administrating taxes by a taxable entity. The directive D-21 stipulates the percentage evaluation for single kinds of breaching duties of taxable entities and it is thus possible that after considering of all these items the penalty will not be forgiven to the taxable entity at all. It is possible to forgive the penalty up to the maximum amount of 75%.

The above mentioned percentage evaluation (expression of the possible remission) is in the directive D-21 stated especially due to securing of the „equal“ treatment of applications. The fulfilment of individual conditions is judged as at the date of release of the decision on the application, not thus at the day when the application is delivered to him.

Remission of interest

In case of the application for the remission of interest on late payment or from the referred amount there is also stipulated a formal requirement, namely on the tax payment from whose late payment the interest incurred.

Compared to the remission of penalty the submission of application for the remission of interest is not timely limited with the deadline of 3 months.

It is possible to forgive the interest on late payment up to the amount of 100% of amount.

Next conditions for the remission are similar like in case of a penalty. Only the reasons for the remission are different. It concerns the so-called justifiable reason for the late tax payment with the amount of percentage evaluation. The relevant facts are stated here as well which will be considered by the tax administrator when judging the application.

The next reason is judging the hardness of the claimed interest due to the unfavourable economic and social situation in case of natural persons. Here the percentage evaluation is specified with the income amount (by stating the multiple of the minimum wage).

The deadline for releasing a decision on the remission of tax appurtenance is set for 3 months starting from the day on which the application has arrived at the factual and locally competent tax administrator.

It is not possible to claim legal remedies against the decision on the remission of tax appurtenance (that means it is not possible to enter a protest against this).

We recommend using this old-new possibility of asking for remission of tax appurtenance also with respect to the positive experience from the past and we recommend to submit applications. With respect to a relative complexity of the process itself and the necessity to observe a lot of conditions we will be pleased to assist you to work it out.