K34 - Tax LawReturn

This paper discusses the current Czech and European legal framework applicable to the adjustment to the taxable amount with respect to claims partially cancelled due to the insolvency of the customer resolved by reorganisation. The partial cancellation, according to the authors, serves as grounds to adjust a taxable amount under the EU VAT Directive. The supplier is entitled to issue a corrective invoice and claim a refund of a proportion of the VAT paid with respect to the delivery of goods or services to an insolvent debtor. However, such practice is not yet followed by the Czech tax authorities who do not allow for a reduction of a taxable amount in reorganisation and only allow such reductions in the case of bankruptcy liquidation. The paper argues that this approach is not compatible with European law. Moreover, such a different treatment of VAT payers in bankruptcy liquidation (resulting in higher satisfaction of VAT taxpayers as creditors) puts reorganisation at a considerable disadvantage and is contrary to the basic principles of insolvency law. Finally, the paper argues that the corresponding claim of the tax authority resulting from the VAT base adjustment constitutes a standard pre-insolvency claim and should not be preferred in the insolvency proceedings under Czech law.

Taxes and other charges that are paid secure the economic existence of national and public budgets and funds. If a tax debtor refuses to consent to or pay their state tax, the state will not let this act go unpunished. While the issue of tax enforcement through taxation or the execution of insolvency proceedings is a highly interesting topic, it is also a huge and extremely sensitive and topical issue. Tax arrears have emerged within our economy and will continue to increase. Likewise, it is also known that the number of insolvency executions ordered for these non-payers is on the rise. This review focuses on the field of tax enforcement and defines the current position. The objective of this paper is to create the basis for further research into the effectiveness of enforcement instruments.

The relatively low property tax in the Czech Republic is determined partly by the respective law and partly by coefficients set by municipalities. Only some municipalities take advantage of their power to change these coefficients; this is partly due to insufficient information about the possibilities and their impacts. The objective of this article is to quantify the impacts of the current situation as well as of selected changes and thus provide a basis for public discussion about the design and rate of property tax in the Czech Republic. In the empirical part, based on detailed anonymised data from tax returns, we focus on the capital city Prague. Prague provides an interesting case to study because of its diversity of property, its size and the extent of its possibilities for altering its property tax. We contribute to the so far limited empirical research on property tax in the Czech Republic by quantifying the impact of property tax on various groups of tax payers, the time development of property tax revenues for municipalities, and the impact of changes in the design of property tax.