Tax and Legal News – April 2026

Uncertainty as the norm

Most of us like things to be clear. This is especially true when it comes to taxes, where large sums of money are often at stake (and sometimes even more, if the dispute escalates to a criminal level). Entrepreneurs, tax advisors and the government would therefore logically like to know where they stand. Where exactly the line is drawn, what is still acceptable and what is not. And if not, how much will it cost them.

The Supreme Administrative Court, as the highest court in the administrative justice system, is traditionally expected to finally settle long-standing disputes. Ideally, once and for all. But the reality is quite different. The Supreme Administrative Court is not a factory for certainty, but an institution whose mission is to strengthen confidence in the judiciary—and thereby cultivate society as a whole. To make sense of a world that, for some reason, refuses to organize itself in a meaningful way. At least, that is how its chairman, Karel Šimka, has described its role at various professional forums.

The Supreme Administrative Court has also played a significant role in transforming the tax administration. Today, it operates in a completely different way than it did ten or twenty years ago. It is more professional, analytically stronger and significantly less prone to basic errors. For businesses, this leads to a rather unpleasant conclusion: disputes are rarely won “in court” anymore. What matters is the substance. And above all, the narrative—whether the entire arrangement makes economic sense even without the tax benefit. It is precisely in this area that the case law of the Supreme Administrative Court operates today.

This is particularly evident in cases of abuse of the law. Restructuring, financing, intra-group loans. Formally, everything may be in order, the structure sound and the documentation flawless. But then a simple yet uncomfortable question arises: does any of this make sense on its own? Or is the main goal tax savings, for which a business rationale is being sought after the fact? As soon as the tax aspect begins to take precedence over economic logic itself, red flags start to go up. And no one knows for sure today exactly where the line is that, once crossed, will prompt the court to say, “No, not here.”.

Similarly vague boundaries apply to the practice of working as a self-employed contractor (the so-called black system), which, moreover, has increasingly come under scrutiny by the State Labor Inspection Office in recent years. On the one hand, there is the appealing idea of freedom of choice: work however you want, on your own responsibility. On the other hand, there is the state, which needs to collect taxes and insurance premiums and fund the social welfare system. The result is a gray area. A very gray one. The number of customers is counted, economic dependence and the degree of actual compliance are examined—but none of these criteria alone is decisive. It is always a combination of factors. And so it can easily happen that a structure that held up yesterday may not hold up tomorrow. Not because the law has changed, but because the facts of the case are assessed differently.

Furthermore, improved algorithms and data analysis are playing an increasingly significant role. The selection of tax audits is no longer random, and we must expect it to become increasingly sophisticated. For businesses, this means one thing: relying on the hope that “they won’t find out” is not a strategy. The government has a better overview today than ever before—and it will only get better.

Administrative courts are therefore not tasked with eliminating uncertainty. Rather, they must keep it within limits that are still tolerable for the business environment. Decisions must be made in a timely manner and, if possible, consistently. Indeed, it is precisely in the speed of decision-making that we tax advisors have seen a significant shift in recent years: whereas cases used to languish in the courts for several years, today most disputes before the Supreme Administrative Court are decided within a year.

As the president of the Supreme Administrative Court aptly noted in an interview, the role of the judiciary is like maintaining an English lawn. It needs to be watered. Mowed. Over and over again. But it will never be finished.

And therein lies perhaps the most important insight for tax practice. Uncertainty in the tax arena today is neither an exception nor a failure of the system, but rather its normal operating condition. It cannot be completely eliminated—one can only learn to work with it, much like other business risks. Perhaps the following reading will help you in this difficult task....