The control report is a duty, which will begin to trouble companies as well as individual entrepreneurs, who are VAT payers, from the beginning of the year. The new duty will, according to estimates, affect approximately 550,000 entities. To make matters worse, all payers need to file their tax return electronically from the new year, because the previously existing exception for natural persons has been cancelled as of this year.

Enough was written about the control report itself before the end of last year already, especially on the subject of the contents of the control report form and the sanctions, which many tax specialists considered inadequate in the least. 

Although payers are currently mainly concerned about correct content of the form, “procedural” problems related to this new tax statement cannot be omitted either. The procedurally problematic areas can be summarised into the following points:

1. A 5-day period for dispelling doubts of the tax administrator, which includes every calendar day (that is not only workdays)
2. Delivery of summons to the email address of tax payers, who do not have a set-up data box 
3. Constitutional conformity of sanctions:

1. CZK 10,000 if the taxpayer does not submit a control report within the additional period, after having been summoned by the tax administrator to do so; and 
2. CZK 30,000, if the taxpayer does not submit a control report based on summons to make a change, to complement or confirm the data stated in a submitted control report

1. The determination of the date, from which the period begins to run for payers, who submit tax return quarterly, but the control report must be submitted monthly in case a chargeable event with the place of fulfilment in the Czech Republic occurs (or in case of accepting payment prior to the date of  occurrence of a chargeable event)

Point 1: 5-day period

If the tax administrator has doubts about the correctness or completeness of the data stated in a control report, he will summon the taxpayer to alter or complement the data, or to confirm the original data. The summons is sent electronically to data boxes or to email addresses of those payers, who do not have a data box set up. The law has set a period of 5 calendar days for correction or confirmation of the data. Although it is possible to consider this stipulation of the VAT act as non-conforming with article 32, paragraph 2 of the tax code, which states that:

“a deadline shorter than 8 days can only be set exceptionally for actions that are simple and especially urgent”,

yet VAT payers cannot but “deal” with the stipulation somehow, in practice. 

A difficulty occurs especially with regard to a possible accumulation of public holidays (such as for example July 5 and July 6 or Easter, when Good Friday will newly also be considered a public holiday), when taxpayers are not left with much time for an efficient solution of the situation. Problems can also occur for some external suppliers of tax consulting services, who will not be able to obtain the relevant data from their clients within the 5-day deadline. 

If the VAT payer does not react to summons from the tax administrator within 5 days by submitting a subsequent control report, a fine of CZK 30,000 will automatically be imposed on him.

In case you have to deal with such situations, we therefore have some practical advice for you:

1. If you have set up a data box, make it accessible to a greater number of persons and entrust them with checking it regularly and carefully. You will thus prevent situations, when you could miss a deadline. In the case of data boxes, the summons sent by the tax administrator is considered delivered at the moment of the data box being opened, or when a 10day period after its sending expires, if the data box is not opened.
2. If you do not have a data box, the tax administrator will send you summons to the email stated in the form for the control report. The day, on which the summons is sent from the tax administrator’s server, is considered to be the date of receipt. From the above-stated, it is clear that you are at a disadvantage compared to payers, who have set up a data box. Our practical suggestion therefore is – set up a data box. This will simplify and accelerate your communication with other authorities as well.

It can be expected that in practice, there will also be cases, when it will not be possible to react to the summons from the tax administrator simply due to an absence of correct data. This situation is somewhat more complicated from the procedural point of view, but we are, nonetheless, able to solve it, too. If it occurs in your case, do not hesitate to turn to the contacts provided below.

You will find more details on items 2 to 4 in the next issue of our newsletter.