On 2 December 2022, the Financial Newsletter 15/2022 published a new Guidance No. GFD-D-58 file no.: 34006/20/7700-10123-050167, issued by the General Financial Directorate on 23 November 2022 (hereinafter referred to as the “Guidance”), for the waiver of tax accessories under Act No. 280/2009 Coll., the Code of Tax Procedures, as amended (hereinafter the “Code of Tax Procedures”).

The Guidance, which comes into force on 1 February 2023 and which repeals the existing Guidance No. GFD-D-47 of 8 March 2021, was issued following the decision-making activity of the Supreme Administrative Court (hereinafter the “SAC”), which we have already informed you about in our article from 2 November 2021 on the current SAC case law concerning the waiver of penalties under article 259a of the Code of Tax Procedures in connection with tax fraud. In its judgments, the SAC concluded that penalties related to the taxpayer’s participation in tax fraud may not be waived even if the criteria for waiver are otherwise met.

This opinion was also examined by the Extended Senate of the SAC, which in its Resolution of 26 January 2021, No. 1 Afs 236/2019-83, No. 4141/2021 Coll., confirmed that: “When assessing fulfilment of the conditions under article 259c(2) of the Code of Tax Procedures, the violation of tax regulations, which is the factual and legal basis for the imposition of the penalty, for which the tax subject requests waiver, is not taken into account. However, the tax administrator shall take this violation into account within the scope of administrative discretion under article 259a(2) of the Code of Tax Procedures and may not waive the penalty with regard to the nature, intensity or other circumstances of the violation.” In other words, in the opinion of the SAC, in addition to the criteria of the taxpayer’s cooperation and the frequency of the infringements, the tax administrator also takes into account the nature of the conduct that led to the imposition of the penalty, the so-called source conduct.

The new Guidance introduces these jurisprudential conclusions of the SAC into the application practice, not only in relation to the waiver of penalties, but also in relation to the waiver of interest and penalties for late tax statements. The Guidance newly provides:

• When assessing the scope of waiver of the tax accessory, the administrator is entitled to take into account the nature, intensity or other circumstances of the so-called source conduct, i.e. the conduct, which is the factual and legal basis of the tax accessory, the waiver of which is requested and which gave rise to the accessory, in accordance with recent administrative case law (Resolution of the SAC of 26 January 2021, No.1 Afs 236/2019-83).
• If the tax administrator finds that the nature, intensity or other circumstances of the source conduct (e.g. abuse of law, tax concealment, deliberate participation in tax fraud, etc.) preclude the waiver of the tax accessory, it shall reject the request by a decision, even though the violation would be irrelevant from the point of view of the condition under article 259c(2) and (3) of the Code of Tax Procedures.
• The tax administrator is entitled to make this conclusion in view of the principle that no one can benefit from his own dishonesty, among other things. 
• If it is not appropriate to reject the application on the grounds of defective source conduct (see above), the tax administrator will proceed to a further assessment of the application for waiver of tax accessory according to the rules expressed in the Guidance.

Thus, it can be summarized that in the case of tax assessment due to abuse of law, tax concealment, conscious participation of the tax subject in tax fraud, etc., it is necessary to be prepared that the tax administrator may not waive the related accessories to the tax additionally assessed in this way.

 For the sake of completeness, we briefly mention that the Guidance also introduces other partial changes. For example, a new excusable reason related to the functionality of the tax portal  www.mojedane.cz has been added, for which interest on late filing may be waived under article 259b(2) of the Code of Tax Procedures (item No. 16 of the table “Excusable reason for late filing”), which is constructed similarly to the existing excusable reason for waiving the penalty for late filing (item No. 3 of the table “Excusable reason for late filing”). The Guidance further specifies the decisive moment for assessing fulfilment of the conditions for excluding the possibility of waiver under article 259c(2) of the Code of Tax Procedures for individual partial situations.

The full text of Guidance No. GFD D-58 can be found on the website of the Financial Administration here.

Author: Lenka Kočerová, Jaroslava Půtová