Czech Republic: Waiver of default interest on VAT granted (Supreme Administrative Court decision)

A Supreme Administrative Court decision concerning waiver of default interest arising from incorrect VAT treatment

A Supreme Administrative Court decision concerning waiver of default interest

In its judgment 4 Afs 311/2021-33, the Supreme Administrative Court (SAC) addressed whether a taxpayer was entitled to a waiver of default interest arising from incorrect value added tax (VAT) treatment.

The taxpayer had actively corrected its mistake by filing additional tax returns and paying the tax. However, the tax administrator classified the taxpayer’s conduct as a repeated breach of obligations in tax administration and did not grant the waiver.

The SAC noted that a waiver of default interest is a privilege for those who cooperate with the tax administrator and act honestly, fairly, and in a sincere effort to correct their mistakes. Therefore, the conduct in the given case must not be equated to that of entities who repeatedly and purposefully fail to cooperate with and thwart the actions of the tax administrator. The court also agreed with the taxpayer's view that their errors constituted a single act, not a repeated breach of tax regulations. The SAC thus sided with the taxpayer, emphasizing their cooperative, honest and fair approach during the proceedings.

Read a July 2022 report prepared by the KPMG member firm in the Czech Republic


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.