Lhůta pro stanovení daně – daňová kontrola u společností s daňovou ztrátou

In the previous alert, we focused on tax losses and their impact on the running of the tax assessment period. In today’s alert, we will address how the initiation of a tax audit for the period for which the tax loss was assessed affects the tax assessment period.

According to § 148 paragraph 3 of the Tax Code, if a tax audit is initiated before the expiration of the tax assessment period, the tax assessment period is interrupted and begins anew from the date of the initiation of the tax audit. Under normal circumstances, this would extend the period by three years (see Alert). However, in the case of a period for which a tax loss has been assessed, determining the new length of the period can be more complex.

This situation was addressed by the Supreme Administrative Court in No. 6 Afs 265/2023–44. The basic period for tax assessment in case of loss-making companies is eight years. The core of the dispute was when the period expires if a tax audit is initiated within this eight-year period. According to the taxpayer, the period should expire three years after the initiation of the tax audit. The court stated that the initiation of a tax audit restarts the tax assessment period; however, this provision does not specify the length of the new period. In the case of a period for which the tax loss was assessed, the length of the new period is derived from § 38r paragraph 2 of the Income Taxes Act. This provision clearly indicates that in this case, the period is again eight years. Thus, this eight-year period begins anew from the date of the initiation of the tax audit. However, the length of the basic period will gradually shorten by one year for the subsequent periods, provided that no further tax loss is assessed; for example, for the period following the period for which the loss was assessed, it will be seven years.

According to the court, it is important to remember that the tax assessment period is limited by the objective ten-years period according to the Tax Code.

Example from the aforementioned court decision

The taxpayer submitted a tax return for the tax period 2013 on April 1, 2014. Since a tax loss was determined based on this return, the tax assessment period would have expired on April 1, 2022. However, this period was interrupted by the initiation of a tax audit on November 25, 2015, which caused the tax assessment period to restart. In this case, it was not a three-year period, but again an eight-years period, which will expire on November 25, 2023. However, this period would also end at the latest upon the expiration of the objective ten-year period, i.e., on April 1, 2024, in the event of any further extensions (e.g., due to the issuance of a payment assessment in the last 12 months of the period).

Authors:

Ladislava Zamazalová

Dominika Douderová