NSS k prokazování přijetí služeb – dodavatel a rozsah

NSS on proving receipt of services - supplier and scope

A number of cases currently pending before the Supreme Administrative Court concern the issue of proving the supplier and the scope of services received (especially advertising services or auxiliary services in production). In these cases, the tax authorities questions the right to deduct VAT[1], but sometimes also the tax deductibility of the related costs for income tax purposes[2], at the recipient of the services.

Neither the actual performance of the services nor their significance for the economic activity of the customer is disputed in these particular cases. Nevertheless, there are doubts as to whether the actual supplier and the scope of the services provided correspond to the information declared on the tax documents.

The initial problem and the trigger for the tax authorities' doubts are usually various irregularities on the part of the supplier of the services. Often, the number of employees registered with the relevant public authorities is low and, in the tax authorities' view, does not correspond to the scope of the services provided.

Customers generally argue that, at the time they received the requested services, they had no reason to investigate further exactly how and by which specific persons the supplies were provided.

In this context, the SAC in a recent judgment[3] reiterated its earlier view of subcontracting of services. It concluded[4] that “...the relationship between the declared supplier and the subcontractor who provided the alleged supply to the taxable person must be proved...”.

Theoretically, the customer is therefore faced with the task of proving not only the relationship with its direct supplier, but also the circumstances of the cooperation between its supplier and the subcontractor.

On the basis of current case law, service purchasers cannot but be advised to thoroughly check their suppliers, to set up contractual relationships with sufficient level of detailand to properly document the course of cooperation, including the possible involvement of subcontractors.

If you have any questions, please do not hesitate to contact the authors of the article or the EY team you are working with.

Authors:

Jakub Tměj

Anastasia Alieva

[1] See e.g. judgments of the Supreme Administrative Court of 20 May 2024, no. 9 Afs 25/2023 - 48, and of 13 May 2024, no. 10 Afs 7/2024 - 47.

[2] See e.g. the judgment of the Supreme Administrative Court of 15 February 2024, No.3 Afs 399/2021-99.

[3] See judgment of 13 March 2024, No 10 Afs 153/2022 - 90.

[4] See judgments of the Supreme Administrative Court of 11 February 2021, no. 8 Afs 24/2019 - 44, and of 4 May 2017, no. 10 Afs 235/2015 - 75.