Krajský soud ke změně účetní metody

The issue of changing accounting methods was the subject of a dispute addressed by the regional court in judgment 31 Af 7/2024–51.

The company reduced its tax base by the amount representing the decrease in the value of its own-produced inventory. The tax administrator disputed the company's approach, arguing that the change in method was not substantiated.

Based on a change in ownership structure, the company concluded that its previous calculation of inventory value improperly included administrative overhead (a new rule since 2016). The company accounted for this change in method in its tax return as a deduction from the tax base. The tax administrator raised doubts about the legitimacy of this approach and requested documentation of the previous calculation formula that included the item of administrative overhead. The company was unable to present this evidence during the dispute, leading the court to reach the same conclusion as the tax administrator.

What can be taken from this? Changing in accounting method is not a routine accounting operation, and the accounting entity should carefully consider all accounting and tax implications. In its assessment, the court further emphasized that a change in accounting method can only be discussed if both the original and new methods are permissible under accounting regulations. In practice, this means that a change  in accounting method cannot be used to correct omissions or erroneous accounting from previous periods.

For completeness, we would like to add that a cassation complaint has been filed against the judgment, and a review of the procedure by the Supreme Administrative Court is expected.

Authors:
Ivan Zhurkin
Lucie Vrabcová