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14.5. Interest and Penalties

Late Return Filing

Failure to file a tax return by the due date will result in a penalty equal to 10% of the taxes due.

Late Tax Payment

Late tax payments are subject to an interest penalty at the rate of 8% (reduced from 14% effective 1 January 2021) plus the repo rate of the Czech National Bank on the first day of the relevant calendar half-year period. The interest penalty may be applied for up to 5 years.

It is clarified that in case of delay in payment of tax which is due in 2020 and not yet paid, the interest penalty at the rate of 14% plus the repo rate applies until 31 December 2020, and 8% plus the repo rate applies from 1 January 2021 until the date of payment.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, penalty waiver is generally provided for late tax payment in case where it can be demonstrated that the impact of COVID-19 made it impossible to fulfill the tax liability.

Further, interest on overdue taxes is waived for taxpayers if arising from 12 March 2020 to 31 December 2020, provided the tax deferral or installment payments are authorized by the tax authorities for reasons related to the COVID-19 pandemic.

Further, interest waivers are provided for the late payment of VAT and road tax subject to the following:

  • The late payment of VAT pertains to the monthly periods of September 2020 to March 2021 or the corresponding quarterly periods, and the payment is made by 16 August 2021; and
  • The late payment of road tax is for the year 2020, and the payment is made by 16 August 2021. Further, a waiver is provided for the advance road tax payment due on 15 April 2021.

Filing of an Incorrect Return

When an incorrect return is filed, and the tax authorities increase the taxpayer's tax liability, or the tax deductions are reduced, a penalty equal to 20% of the difference is imposed.

In the event a reported tax loss is decreased, a penalty equal to 1% of the difference is imposed.