Have you received shares (free of charge or at a discount) as part of an employee shares or option plan? Mainly employees working in Czech branches of foreign companies encounter this benefit. They can participate in the plans of foreign companies, whose shares are usually listed at stock exchanges in the US or in Germany, for example. If the related benefit was not reflected within the monthly wage at you Czech employer, you most likely should submit/ should have submitted a tax declaration and taxed the given income by means of the declaration.

In the recent months, we encountered several cases, when the tax administrator received information about this income, as part of his tracing activity, and demands that the taxpayers submit an additional tax declaration or prove that the related income has been duly taxed. In some situations, this was even income for periods otherwise precluded. But due to the fact that the financial office received the information within an international request, during which the deadline for determining taxes is suspended from the year 2014, the given taxable period may still be open. Below, we add a brief summary on the deadlines for “additional” tax assessment.

The power of the tax administrator to determine the height of taxes for the respective taxable period expires at the end of a three-year period. The beginning of this period is identical with the moment that tax can first be assessed, that is the day, on which the deadline for submitting the tax declaration expired, or on which the tax became due. The deadline for determining the tax has a preclusive nature, the length of which is influenced by cases stipulated by law. The code of tax procedures stipulates an enumerative list of acts on the part of the tax administrator or the taxpayer, which interrupt or prolong the course of the three-year period.

Among other things, the deadline is also prolonged in case the tax administrator begins a tax audit before the expiration of the period. On the day this act is made, a new three-year period begins. This period may, moreover, be interrupted in its course for reasons specified by law, for example during the time the tax administrator requests information based on international cooperation on tax administration. The course of the period is then resumed on the day the answer to the sent request is delivered on international cooperation in the given matter is completed.

The deadline for determining the tax ends 10 years from its beginning at the latest. There are only two explicitly stated exceptions, when tax can be assessed additionally even after this deadline. Tax can be determined regardless of the expiration of the ten-year period in a situation, when a final decision has been issued by court on tax crime having been committed or if the taxpayer himself submits a tax declaration and also pays the tax for the purpose of extinction of liability for a tax crime due to active repentance.

If the above relates to you in any way, we will be glad to help you with preparing the tax declaration and resolving the given situation.