Czech Republic: Reports on recent tax-related Supreme Administrative Court (SAC) decisions

Determining losses on inventories; proving beneficial ownership of royalties (Supreme Administrative Court decisions)

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August 12, 2025

The KPMG member firm in the Czech Republic prepared reports on recent tax-related Supreme Administrative Court (SAC) decisions:

  • The SAC held (1 Afs 77/2025-74) that the standard of loss rate on inventories must be economically justified and generally unchanging (unless a change is duly justified) and that the taxpayer cannot offset shortages and surpluses between different types of assets. Read an August 2025 report
  • The SAC held (10 Afs 47/2025-49) that the taxpayer failed to prove that royalties paid to certain nonresident distribution companies, which then paid the royalties to other nonresident production companies, were actually beneficially owned by the production companies and thus entitled to a lower withholding tax rate under the income tax treaty between the Czech Republic and the country in which the production companies were resident. The SAC found that the taxpayer’s mere declaration regarding the identity of the beneficial owners of the royalties was insufficient proof. Read a July 2025 report

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