Lhůty pro stanovení daně

In several alerts, we would like to address the rules for the determination of the tax periods opened for tax assessment. We will first focus on the general rules and gradually move on to specific provisions that may significantly affect the periods opened for tax assessment.

The standard period for tax assessment in the Czech Republic is three years. It begins on the day after the deadline for submitting the regular tax return has passed. If the obligation to submit a regular tax return did not arise, the deadline starts on the day the tax became due. If the regular tax return is submitted after the deadline for its submission, the period for tax assessment begins only on the actual submission date. We also draw attention to special rules for income taxes in case of assessed tax loss or utilizing investment incentives in the form of tax relief, under which the standard period for tax assessment is significantly longer.

Under certain conditions, the standard period for tax assessment may be extended, may restart, or its running may be suspended for a certain time.  For example, the period is extended by one year if, in the 12 months preceding the expiration of the current period, a supplementary  tax return has been submitted, a notice of a request for a supplementary  tax return leading to a tax reassessment has been issued, or a decision on tax assessment has been announced. If a tax audit is initiated before the end of the current period for tax assessment, the period will be restarted from the day the tax audit begins.

However, the period for tax assessment will always (with a few exceptions) end no later than ten years from its beginning. One of the exceptions is the case where a final court decision has been issued regarding a tax crime. In this case, the tax can be assessed until the end of the second year following the year in which the court decision became effective. Another exception is when a taxpayer submits a tax return due to effective remorse within criminal proceedings and simultaneously pays the tax along with its accessories. In this case, the tax can be assessed regardless of whether the period for tax assessment has already passed. According to recent case law, another exception is when a taxpayer submits a supplementary  tax return for a lower tax liability within the last 12 months of the original 10-year period – according to the Supreme Administrative Court, this also extends the 10-year period by one year (see judgment No. 1 Afs 251/2022 – 44).

Examples:

Tax period from January 1, 2021, to December 31, 2021, the period for tax assessment ends on July 1, 2025.

On February 3, 2025, the company submits a supplementary tax return. Since February 3, 2025, falls within the 12 months before the end of the original period (July 1, 2024 – July 1, 2025), the period for tax assessment is extended by one year to July 1, 2026.

Tax period from January 1, 2021, to December 31, 2021, the period for tax assessment ends on July 1, 2025.

On October 11, 2024, a tax audit was initiated. According to the current case law of the Supreme Administrative Court (whose conclusions differ from the approach of the state administration), the period will restart on the day the tax audit begins, i.e., on October 11, 2024. The new end of the period would thus be October 11, 2027. Based on the tax audit, the tax administrator issues an additional payment assessment on March 2, 2026. Since the notice of the additional payment assessment does not occur in the last 12 months of the current period for tax assessment (i.e., in the period from October 11, 2026, to October 11, 2027), the period  for tax assessment is not extended, and its end will fall on October 11, 2027.

However, if the tax administrator issued the payment assessment only on September 15, 2027, the period for tax assessment would be extended to October 11, 2028. If the taxpayer appealed against the payment assessment, the Appeals Financial Directorate would have to decide on this appeal by October 11, 2028. For completeness, it should be noted that in all cases, the objective 10-year period, which would end on July 1, 2032, was not exceeded.

We would like to add that the above examples are for illustrative purposes only. In all examples, we assume that the taxpayer  not assessed a tax loss for the 2021 tax period , nor was it possible to deduct any tax loss from the tax base during this period, the taxpayer is not a recipient of investment incentives in the form of tax relief , and the tax return was submitted by the deadline of July 1, 2022. For simplification, we assume that July 1 of the given year will always be a weekday.

Authors:

Ladislava Zamazalová

Dominika Douderová