On Monday 5 October 2020, the Czech government declared a state of emergency on the territory of the Czech Republic in compliance with articles 5 and 6 Constitutional Act no. 110/1998 Sb., on the Security of the Czech Republic, due to the worsening of the epidemic situation in relation to the occurrence of the SARS-CoV-2 coronavirus (hereinafter “COVID-19”), for a period of 30 days. The declaration of the state of emergency was decided at an extraordinary meeting on Wednesday 30 September 2020.

The declaration of the state of emergency and other accompanying measures for prevention of the spreading of the COVID-19 epidemic will certainly have a negative impact on a number of taxpayers. One of the negative impacts for taxpayers may be the loss of ability to fulfil their tax obligations (tax underpayments) to the tax administrator. In order for the taxpayer not to get into insolvency in relation to the tax administrator, he has the option, in compliance with the stipulation of article 156 of act no. 280/2009 Coll., code of tax procedures (hereinafter the “CTP”), to request from his local financial office a deferral of tax payment, or its division into instalments. There is no special form for the request for deferral under the stipulation of article 156 of CTP, but this filing, too, must meet the requirements laid down in the stipulation of article 70 of CTP.

The tax administrator will issue his decision following the request submitted by the taxpayer, in which the taxpayer must sufficiently justify, in compliance with the stipulation of article 156 of CTP, why he is requesting deferral of tax payment or its division into instalments, and enclose all proof supporting the statement of the taxpayer. At the same time, the taxpayer will also propose a new date of payment or an instalment plan. This option can also be used by taxpayers, who are having difficulties with paying tax caused by extraordinary measured adopted in relation to the occurrence of COVID-19. The reasons for the request may be substantiated for the tax administrator with all relevant documents that prove the influence of the occurrence of COVID-19 on the economic situation of the taxpayer and his difficulties with paying the tax. These include for example the influence of a quarantine measure on the taxpayer, illness, necessary care for a member of the household, comparing occupancy or revenues with the previous period, proving slump in production due to obstacles on the side of a supplier relating to the extraordinary measures etc. In case of a positive decision by the tax administrator, the related late-payment interest and the interest on the deferred sum incurred until 31 December 2020 will also be waived.

In this context, we would like to inform you that if the taxpayer submits a request to the financial office by 31 December 2020, the administrative fee is waived based on a decision of the finance minister, and need not be paid. Commonly, an administrative fee of CZK 400 needs to be paid.

With regard to the current situation, the finance minister decided about a waiver of tax, tax accessories and tax prepayments on grounds of an extraordinary event (published on 14 October 2020 in the Financial Newsletter number 22/2020). This decision only applies to taxpayers, whose activity has been banned or limited from 14 October by a Resolution of the Government of the Czech Republic of 12 October 2020 on adoption of an emergency measure no. 1021, and which operated the following activities between 1 June 2020 and 30 September 2020: operation of restaurant facilities and bars; operation of musical, dance, gaming and similar social clubs and discotheques; the organising of concerts and other musical, theatre and film performances; the organising of wedding celebrations, celebration of entering into registered partnership and funeral receptions; the operation of circuses and  variety shows; the organising of markets and other traditional events; the organising of congresses and other educational events; the organising of fairs; operation of indoor sports grounds, gyms and fitness centres, artificial swimming pools, wellness facilities; the operation of zoological and botanical gardens; the operation of museums, galleries, exhibition premises, castles, chateaus, and similar historical or cultural buildings, observatories and planetariums. You can find further information about this decision and conditions for waiver in our more detailed article here.