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At the heart of the dispute is the relationship of two mutually dependent, to some extent, procedures by the tax administration, in the so-called tax assessment (it means after submitting and assessing the tax return due), respective to its application priority. The tax can be assessed on the basis of an additional tax return or by a tax control, the so-called ex-officio. The taxpayer voluntarily submits the additional tax return , or to submits it when the tax administrator asks. At the end, it is the tax administrator who chooses between initiating a tax audit or issuing an invitation to file an additional tax return.
It was not clear from the judgment of the Supreme Administrative Court, how much discretion the tax administrator has in this choice. Therefore, the case was referred to the enlarged Senate, which decided as follows:
How do you know when it is the “borderline” case in practice, when it is necessary to examine whether the tax administrator acted in the opinion of the enlarged Senate? As a rule, this is the situation where tax administrators initiate tax controls in a so-called narrow range – when they are typically investigating only one or several selected suppliers / customers. In such a case, I recommend maximum caution and focus on the facts that led the tax inspector to start such a control. It may happen that the tax administrator has information on the tax assessment from another procedure, and, therefore, it can be reasonably assumed that he should not initiate a tax control in such a case, but instead ask for the submission of an additional tax return.
Finally, I can just say – let us be vigilant, do not rely on the fact that the tax administrator will always proceed in accordance with the law and judgments of domestic courts in all events. Only then are we able to protect our property rights.
*Resolution of the enlarged Senate NSS sp. 1 afs 183 / 2014-55 issued on 16th November 2016