Last January, a mandatory online filing was prescribed for VAT returns. An amendment to the Tax Code effective since 1 January 2015 has introduced another, more significant extension of mandatory electronic communication which will now apply to tax returns for 2014 filed after the effective date of the amendment (such as road tax, income tax, and real estate tax returns). Who and what is subject to this online filing requirement?
Under the amended wording of Section 72 (4) of the Tax Code, if a taxpayer or the taxpayer’s representative has a data box accessible (i.e. not only created, as was the original proposal) or is required by the law to audit his financial statements, the taxpayer must only make the filing via a data message in a prescribed format (XML) and structure. Such filings mean filings on forms such as applications for registration, notification of change in registration data (which also covers applications for deregistration), tax returns and supplementary tax returns.
For completeness, please note that the filings above that are governed by the Tax Code and the obligation to make online filings also apply to statements expressly listed in Section 101a of the VAT Act and employment tax statements and withholding tax statements provided in the Income Taxes Act.
According to the General Financial Directorate, the requirement to make an electronic filing does not apply to filings whose format and structure are not published, i.e. are not available at the Electronic Filing Tax Portal (these include partial real estate tax and real estate acquisition tax returns).
In practice, this provision is not expected to cause any trouble to most legal entities whose data boxes are created and made available by operation of the law. However, difficulties in interpretation may occur in individuals who can have various data boxes as entrepreneurs or non-entrepreneurs or have mandatory data boxes for professionals. Numerous options can arise in the case of a filing related to them as private persons (a real estate tax return in respect of their private real estate) or related to their business activity (such as road tax). These issues are to be made clear by the Coordinating Committee with the Chamber of Tax Advisers of the Czech Republic, which is currently being discussed. We will report on the conclusions.
Penalties for non-compliance
A tax return (statement) filed incorrectly (that is, in a form other than electronic) may be penalised by the tax authorities with a fine of CZK 2,000 to CZK 50,000 in cases where the taxpayer would thereby seriously obstruct the administration of taxes.
What is considered an electronic filing by law?
In conclusion, let us summarise what the law considers an electronic filing:
- A data message filed via the Tax Portal (http://adisepo.mfcr.cz); the data message must be signed with a recognised electronic signature (S. 71 (1) (a) of the Tax Code);
- A data message filed via the Tax Portal without a recognised electronic signature if the message is confirmed to the tax administrator or repeated in writing or verbally in a report within 5 days (S. 71 (3) of the Tax Code);
- A data message filed via a data box (S. 71 (1) (b) of the Tax Code); or
- A data message with the filing person’s verified identity in a manner allowing logging in his data box (S. 71 (1) (c) of the Tax Code) – this is a new manner valid since mid-2014).
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