Deferment of tax payments and waiver of interest

In the context of the coronavirus epidemic, the financial administration presented several measures to help taxpayers deal with the situation.

One of the measures in the area of cash flow is the possibility to request a deferment of tax payment or its payment in installments. These are instruments of the tax code that we already know, but currently until 31 July 2020, applications are free of administrative fee of CZK 400.

Deferment of tax payment can be requested for any tax (e.g. VAT), a new thing is the possibility to request a deferment of payroll tax and withholding tax.

In the application, it is necessary to state and document one of the legal reasons for which the tax office may allow the deferment of tax payment or its payment in installments:

1. if the immediate payment would mean serious damage to the taxpayer,
2. if the living conditions of the taxpayer or his dependents would be endangered,
3. if the immediate payment would lead to the termination of the taxpayer's business, and the income from the termination of the business would probably be lower than the tax generated by it in the next tax period,
4. it is not possible to collect the tax from the taxpayer at one time; or
5. in the event of a reasonable expectation of the partial or complete cessation of the obligation to pay the tax.

If the difficulties in paying the tax are due to emergency measures taken in connection with the occurrence of coronavirus, they can be supported to the tax office with all relevant evidence resulting from quarantine, sickness, necessity to take care of dependent persons, comparison of turnover with previous periods, proving decrease in production due to extraordinary measures on the side of the supplier, etc.

In connection with the deferment of tax payment, we recommend submitting also the request for waiver of interest on the deferred amount, which is also free of administrative fee until 31 July 2020.

The request must state and justify the reason for the delay, i.e. why it was not possible to pay the tax on time. If the taxpayer proves credibly that the delay in payment of the tax is the result of the action of extraordinary measures, interest on the deferred amount will be fully waived.

Similarly, a request for waiver of interest for late payment can be formulated, which is also free of the administrative fee.

The requests are submitted to the locally competent tax administrator. The requests do not have a specified form, however, the financial administration has published drafts of the requests for deferment of tax payments and for waiver of interest, which can be used.

To succeed with the requests, we will be very pleased to assist you with preparation or review of the requests prior submitting to tax authorities.