We would like to inform you about an interesting judgment of the Supreme Administrative Court (SAC) No. 9 Afs 147/2020 – 87 of 14 December 2023.

In the present case, the complainant filed a supplementary tax return for the fourth quarter of 2015, in which he claimed the cost of a vehicle for the purposes of his business and attached a tax document with a taxable transaction date of 15 July 2015. In response to the tax administrator’s invitation to remove doubts, the complainant submitted a log book. The tax administrator found that the complainant’s logbook began on 7 July 2015, but according to the information from the dealer, from whom the tax administrator requested information, the vehicle was not physically handed over until 15 July 2015.

Therefore, the tax administrator sent an appeal to the Police of the Czech Republic pursuant to Section 57(1)(d) of the Tax Code, requesting information on the movement of the vehicle, specifically requesting: “information on the movement of the motor vehicle with license plate [...] in the period from 1 July 2015 to 31 March 2016 on selected roads, namely: the D8 motorway, on- and off-ramps of other motorways in the vicinity of the city of Prague”. In response to the request, the police sent the tax administrator a table of records of movements of the vehicle with information about its passages on individual days and times during the requested period under individual cameras on a selected section of roads in Prague and its surroundings.

The Court of Cassation was dealing with the case for a second time, first dismissing the appeal.[1] The SAC originally upheld the right of the tax office to request records from the so-called Automatic Vehicle Inspection system from the Police of the Czech Republic for the purpose of tax administration. However, this judgment, for which the SAC was awarded the mock prize of “Official Snooper”[2], was overturned by the Constitutional Court last March.[3] The reason was that the SAC did not deal with the question of whether the police were entitled to process the previously acquired CCTV recordings at the request of the tax administrator, i.e. to sort the CCTV recordings into the form required by the tax administrator and to hand over the processed data to the tax administrator for the purposes of the tax proceedings. The SAC thus had to re-examine the case in the light of the binding legal opinion of the Constitutional Court[4]. This time, however, the Court found the appeal to be well-founded.

At the outset, the SAC stated that it is necessary to distinguish between the actual taking of camera recordings by the Police of the Czech Republic and the subsequent provision of information from them to the tax administrator:

• Section 60(1) of the Police Act is not relevant to the provision of data in this case, as it regulates the processing of information and data internally for the purposes of the Police itself.
• The provision and processing of personal data and information externally to other public administration bodies is regulated by Section 78 of the Police Act.
• The possibility of the tax administrator to request from the Police of the Czech Republic camera records on the movement of a vehicle from the point of view of the tax administration is regulated by Section 57(1)(d) of the Tax Code.

However, both relevant provisions (Section 78 of the Police Act and Section 57(1)(d) of the Tax Code), on the basis of which data could be processed and transferred by the Police of the Czech Republic to the tax administrator, have a common condition of the data being necessary for the tax administration.

Given that the provision of the data itself potentially constitutes an interference with the right to privacy and the right to informational self-determination, it is also necessary to address the proportionality test, i.e. to assess whether the provision of the data was:

• appropriate (fit) to meet the objective of tax administration (correct detection and assessment of tax),
• necessary to achieve that objective (i.e. there is no lesser means),
• and, if so, to assess proportionality in the narrower sense (weighing the seriousness of the interference with rights against the objective of tax administration).

Referring to the key principle of the burden of proof in tax proceedings, where the tax administrator relies on the allegations and evidence of the tax subject and it is not primarily the tax administrator who, on its own initiative, establishes the facts and material truth, the SAC stated in the case that:

• In the proceedings before the tax authorities, the complainant submitted, in particular, a logbook to prove the use of the purchased vehicle for economic purposes.

• It is clear from the previous case law of the SAC that the logbook can be challenged even without confronting it with the records from the police cameras, e.g. on the basis of other information available in the tax proceedings or because of the internal inconsistency or generality of the logbook.

• If the logbook can be challenged in another, less invasive way that does not require the transmission of information, including personal data, the use of CCTV footage is not necessary.

• While the use of CCTV footage may be appropriate, it is not necessary: “Necessity as a higher standard of protection is intended to ensure that the rights of subjects will only be interfered with if there is no other way to obtain the information, which may also be personal data.”

• The data in the logbook could therefore have been questioned in other ways and it was left to the complainant to dispel any doubts the tax administrator might have had. The tax administrator had some doubts (indications) about the logbook, and the complainant himself admitted that the logbook was inaccurate and that he had written it retrospectively.

Thus, it can be summarized that in the given case the tax administrator was not entitled to request the records from the Police of the Czech Republic and to use them as evidence in the tax proceedings, since they were not data necessary for tax administration.  The correctness of the data in the submitted logbook could have been verified and possibly challenged by the tax administrator in a less invasive way. The records from the Czech Police were obtained illegally. It will therefore be up to the tax authorities to reassess the complainant’s entitlement to the tax deduction and, if necessary, to question the use of the complainant’s vehicle for his economic activity in another way.

In conclusion, given that the necessity test was not met, the SAC no longer addressed the question of the proportionality of the authorisation to request and transmit CCTV footage with the complainant’s constitutional rights to privacy and informational self-determination under Article 10(2) and (3) of the Charter, i.e. proportionality in the narrower sense.

[1] Judgment of the Supreme Administrative Court of 21 July 2022, no. 9 Afs 147/2020-34.

[2] The Big Brother Awards (Big Brother Awards, also known as the Biggest Snooper Contest) is a competition, in which entities that have violated people’s privacy the most are selected. In the Czech Republic, the competition is organized by the civic association Iuridicum Remedium (IuRe).

[3] Ruling of the Constitutional Court of 14 February 2023, Case No. IV. ÚS 2621/22.

[4] “The Supreme Administrative Court will thus have to address the question of whether the statutory authorisation given to the police in Section 60(1) of the Police Act actually allows them to provide records to other public authorities (whether the regulation of the information obligation under Section 57 of Act No. 280/2009 Coll., the Tax Code, is sufficient - see recital 14 of the contested judgment). If it concludes that the police can proceed in this way, it will have to consider whether such authorisation is not contrary to any of the constitutionally guaranteed rights, in particular the right to privacy and the right to informational self-determination under Article 10(2) and (3) of the Charter.” (ruling of the Constitutional Court of 14 February 2023, Case No. IV ÚS 2621/22, paragraph 20).