Be aware of possibility of penalty when submitting supplementary tax return

3. May 2022
  • Jaroslava Půtová

With effect from 1 January 2021, Act no. 280/2009 Coll., the Code of Tax Procedure, as amended (hereinafter the “Code of Tax Procedure”), was amended to change the rule that a penalty of 20 % of the assessed tax does not arise in the event of submitting additional tax return.

The General Financial Directorate issued a Methodological Guidance on the application of article 251 paragraph 4 of the Code of Tax Procedure in connection with article 145a of the Code of Tax Procedure with file no. 56921/21/7700-10123-051418.

The stipulation of article 251 paragraph 4 of the Code of Tax Procedure continues to provide that a taxpayer is not obliged to pay penalty on tax claimed in a supplementary tax return or supplementary tax settlement, on the basis of which the tax was assessed. With effect from 1 January 2021, the stipulation also includes the sentence: “This does not apply if this additional tax return or additional settlement was not admissible.

The stipulation of article 145a paragraph 1 of the Code of Tax Procedure provides that: “The submission of a tax statement in the course of assessment or additional assessment proceedings shall not be admissible and shall not initiate further proceedings.

Thus, a new penalty is incurred:

  • If a supplementary tax return or supplementary settlement is submitted and another supplementary tax return or supplementary settlement is then submitted before the tax is assessed (irrespective of whether the tax administrator has initiated any audit procedure in relation to the first supplementary return). This is not a case of a corrective tax return or a corrective tax settlement. 
  • If a supplementary tax return or supplementary settlement is submitted after the deadline set by the tax administrator in the notice to submit it under article 145 paragraph 2 of the Code of Tax Procedure. At the moment of expiry of the time limit set out in the notice, an ex officio additional assessment procedure is initiated and the penalty is incurred, although the tax administrator has not yet initiated a tax inspection prior to the filing of this inadmissible claim, or has not performed any argumentation beyond what was the basis for issuing the above-mentioned notice. 

In addition to the above situations, it should be noted that a penalty also arises if a supplementary tax return or settlement is submitted during a tax audit. This is not a new situation, however; this was already established by case law before the amendment.

Can the penalty be avoided?

Yes, both penalty situations can be avoided. In the first case by verifying that the first additional tax return or settlement has already been assessed by the tax authority before filing the next additional return or settlement. This can be done, for example, by requesting a copy of the additional payment assessment (which can be submitted together with the additional tax return/settlement) or by consulting the file or the tax information box. This will ensure that the second supplementary tax return/settlement is submitted after the first assessment has been made and is therefore not an inadmissible filing.

In the latter case, it is then necessary to comply with the deadline set out in the notice to file supplementary tax return or settlement, where it is also possible to use the option of requesting extension of this deadline. 

If you are currently experiencing this problem and need advice, please do not hesitate to contact us.

Author: Jaroslava Půtová

Author: Jaroslava Půtová