Questions regarding whether directive permits retroactive withholding tax exemptions
The Supreme Administrative Court in November 2024 submitted a request for a preliminary ruling to the Court of Justice of the European Union (CJEU) in case C-828/24 concerning the compatibility of the Czech implementation of the interest and royalties directive (IRD) with EU law.
The case involves a company resident outside of the Czech Republic that applied for an exemption from Czech withholding tax on royalty payments for the years 2014-2018. The Czech tax authorities granted the exemption for 2017 and 2018 but denied it for 2014-2016, citing an expired deadline for claiming the exemption. The Supreme Court raised concerns about whether the exemption could be applied retroactively and whether the exemption decision is a substantive or formal condition.
The Supreme Administrative Court asked the CJEU to clarify if the IRD permits retroactive tax exemptions and if there are deadlines or limits on how far back exemptions can apply.
Read a February 2025 report prepared by KPMG’s EU Tax Centre