Did you underestimate the financial reserve for paying taxes or have you detected a registered underpayment?

In this case, it is not worth it to pretend not to know and wait for activity on the part of the tax administrator. Different types and sums of sanctions will apply to you.

In case you find out you do not have sufficient means for paying the determined tax liability, it is better to communicate with the tax administrator and to request permission for tax deferment or division of payment into instalments. This is due to the fact that the interest on a deferred sum is only 7 percentage points + the repo rate set by CNB. The late payment interest is 14 percentage points + the repo rate set by CNB.

The Supreme Administrative Court recently dealt with this area as well, in a situation, when the option of deferment was used upon detection of underpayment after partial payment of personal income tax. The given judgment was based on the following facts stipulated by law:

• During the period of deferment, no duty to pay a late payment interest arises for the taxpayer, but he has a duty to pay the deferment interest.
• Deferment may be permitted from the date of maturity of the tax at the earliest, retrospectively as well. In case of permission of a retrospective deferment, the late payment interest, which may have arisen, is cancelled and the taxpayer is only obliged to pay the deferment interest.
• If the taxpayer is not capable of fulfilling the conditions, based on which the decision on deferment was made, the duty to pay deferment interest changes to the duty to pay late payment interest. This change of duty occurs on the date of violation of these conditions at the earliest.

In its judgment, the Supreme Administrative Court confirmed the above, that is that the failure to observe the conditions for deferment results in the decision on deferment losing effect with ex nunc effects. The deferment interest for the period, during which the decision on deferment applied, will remain unchanged. The deferment interest changes into late payment interest as of the date of violation of the conditions of deferment at the earliest.

The pitfall for using this advantage, though, are the cases, when permission of deferment can be requested, listed conclusively by the law. In case one of the above-mentioned situations occurs for you, we will be happy to assist you in realisation of the use of this option.

Jan Dyškant