Lhůty pro stanovení daně – ztrátové společnosti

In the previous alert, we focused on the general rules regarding the periods opened for tax assessment. In today’s alert, we will concentrate on specific aspects related to tax losses.

A tax loss assessed for a specific period can be applied in the two preceding and the five immediately following tax periods. However, tax losses generally also have a significant impact on the periods opened for tax assessment, making it important to understand how they can affect tax obligations and processes.

The standard period for tax assessment is generally three years from the submission of the regular tax return. In case of assessing a tax loss, the Income Taxes Act extends the period for tax assessment not only for the period for which the loss was assessed but also for the periods in which this tax loss can be utilized. The period for tax assessment for all the mentioned tax periods will end together with the deadline for the last period in which this loss could be utilized – that is, for the fifth tax period following the loss-making period.

In the past, it was not entirely clear whether the period for tax assessment is further extended if the taxpayer reports additional tax losses during the five-year period for deducting the tax loss (the so-called "chaining of tax losses"). The Supreme Administrative Court addressed this issue and rejected the chaining of tax losses. According to the Court, it is not possible to link the extension of the period for tax assessment to a tax period related to another tax loss, and each period for tax assessment has its own separate regime.

When deducting a tax loss retroactively, the end of the period for tax assessment for the period in which the loss was utilized coincides with the end of the period for the period for which the tax loss was assessed. If the taxpayer decides not to utilize the tax loss in the future, they must notify the tax administrator of this fact no later than the deadline for submitting the regular tax return for the period in which the tax loss was assessed.

Examples:

In the tax period from January 1, 2024, to December 31, 2024, a tax loss was assessed, and therefore the period for tax assessment for this tax period will expire on July 1, 2033.

If the taxpayer decides to deduct the tax loss from the 2024 tax period retroactively in an additional tax return for the 2022 tax period, the above-mentioned period for tax assessment will also apply to the 2022 tax period.

The period for tax assessment for the 2023 tax period will remain unchanged and will end on July 1, 2027. For the tax periods from 2025 to 2029, during which the tax loss for 2024 can be deducted, the period for tax assessment will be the same length as for 2024, meaning it will run until July 1, 2033 (unless additional tax losses are assessed in these periods).

In the tax period from January 1, 2024, to December 31, 2024, a tax loss was assessed. The taxpayer decided to deduct the tax loss retroactively in the 2022 tax period and waive the right to apply the tax loss in the future.

In conclusion, we would like to add that the above examples are for illustrative purposes only. In all examples, we assume that the tax period is the calendar year, the deadline for submitting the tax return is six months after the end of the tax period, no additional tax returns have been submitted, and no other circumstances have occurred that would extend the deadlines (see our Alert). For simplification, we assume that July 1 of the given year will always be a weekday. For completeness, we also note that the taxpayer is not a recipient of investment incentives in the form of tax relief.

Authors:

Ladislava Zamazalová

Dominika Douderová