Czech Republic: Deadline for assessing tax; technical improvement of real property
Supreme Administrative Court decisions
Supreme Administrative Court decisions
The KPMG member firm in the Czech Republic has prepared reports on recent tax-related Supreme Administrative Court (SAC) decisions (read more at the hyperlinks provided below).
- The SAC issued a decision concerning the conflict between new and old tax assessment deadline regulations. The SAC rejected existing case law that would suspend the 10-year tax assessment deadline for old taxes even if court proceedings were initiated after 1 January 2011, when the Tax Procedure Code was already in effect. The SAC held that the Tax Procedure Code regulates the running of time limits fully and exclusively, and therefore the rules on time limits under the Administrative Procedure Code no longer apply in tax matters. According to the SAC, if tax-related court proceedings were initiated before 31 December 2010, the 10-year maximum period for the tax assessment are to be suspended and not run during the court proceedings. Conversely, if court proceedings were initiated after 1 January 2011, the time limit rules under the Tax Procedure Code would apply, and therefore the maximum possible length of the tax assessment period would not be extended. The tax administration has declared that they will follow this new legal opinion in their practice. Read a February 2024 report
- The SAC held that the classification of construction work as either a technical improvement or repair must be assessed on a case-by-case basis. The court disagreed with the tax administrator's opinion that all extensive structural modifications to a property need to be treated collectively as a technical improvement. The SAC stated that it is necessary to examine the mutual interdependence and time sequence of the work carried out. The court agreed with the taxpayer who argued certain repairs carried out during extensive renovation work were separate from the technical improvement, as they were carried out in different parts of the hotel and were merely removing physical wear and tear. The SAC also criticized the tax administrator for not allowing the taxpayer to provide sufficient evidence to prove the technical condition of the equipment and materials used for the repair. The judgment confirms that each case must be examined individually, and all work carried out within a renovation cannot be automatically classified as a technical improvement. Read a February 2024 report
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