Czech Republic: Taxpayer not entitled to reduce tax base because change in accounting method not proven (Supreme Administrative Court decision)
Burden of proof when changing valuation of internally produced inventories
The Supreme Administrative Court (SAC) held that the taxpayer was not entitled to reduce its tax base as a result of an alleged change in its accounting method for valuing internally produced inventories because the taxpayer failed to prove the change had actually occurred.
The taxpayer argued that as a result of changes in accounting regulations (in particular an amendment to the Act on Accounting and to the related decree), they had to adjust the method of valuing their internally produced inventories. The court found, however, that the taxpayer failed to prove the change in accounting method directly, as they did not know the previous calculation formula due to changes in the ownership structure. In addition, indirect evidence presented by the taxpayer did not meet the burden of proof either, as the taxpayer did not prove the components of the previous calculation formula and the fact that the accuracy of the new valuation of their internally produced inventories had been approved by the auditor was not sufficient to conclude that the new valuation was the result of a change in accounting method.
Read a November 2025 report prepared by the KPMG member firm in the Czech Republic