The VAT control report can do a double service for the entrepreneur. Either it just runs quietly through the system and you hardly know about it – or it becomes a source of stress, calls from the tax office and fines of tens or hundreds of thousands of crowns. It is often with corrective and subsequent control reports that the bread is often broken: entrepreneurs are not sure when to file which one, how to do it and, most importantly, how to avoid penalties.
In this article, we will explain what a VAT control report is, who is obliged to submit it and when the obligation does not arise. We will also look at what to do if you make a mistake or forget to submit it altogether, and the difference between a corrective control declaration and a subsequent control declaration. We will also explain what a nil return is. Finally, we’ll look at what the penalties are for filing a control report, when a late filing penalty is incurred, and in what cases it is possible for the tax office to waive the penalty.
The VATcontrol report was introduced by the VAT Act as of 1 January 2016 as a “special tax claim”. This means that it is a separate tax statement that does not replace the VAT return or the summary report, but supplements them with detailed information from tax documents – in particular the relationships between specific suppliers and customers.
Itis submitted only electronically and in a precise structure (XML) and its aim is to check the continuity of documents between trading partners and to detect tax fraud (e.g. carousel chains).
Control reports are generally submitted by VAT payers registered in the country, both Czech and foreign persons registered as taxpayers. In the case of a group of taxable persons, the report is submitted by a member representing the group.
The obligation to report is linked to the occurrence of at least one of the following typical situations in the so-called reporting period (month or quarter):
In other words – if you have a blank VAT return in a given period, this will probably mean that you are not filing a control report either (we explain the exceptions below for zero control reports).
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He does not submit control reports:
Control reports are submitted according to clearly defined deadlines. Legal persons shall always submit control reports on a monthly basis, regardless of whether they have a monthly or quarterly VAT period. The deadline for submission is the 25th day after the end of the calendar month.
The situation is different for natural persons subject to VAT. They submit control statements at the same frequency as VAT returns, i.e. either monthly or quarterly. However, the control report must also be submitted by the 25th day after the end of the relevant tax period. In other words, if you are a quarterly taxpayer – a natural person, you must submit the control report four times a year, always by the 25th day after the end of the quarter.
In terms of content and purpose, there are three basic types of control reports. The regular control report is the first one you file for a particular period and on which you base any corrections. If you discover an error before the deadline for submission, you submit a corrective control report, which replaces the original report in full. However, if you discover the error after the deadline, you use a subsequent control report to make additional corrections.
Find out how to file an audit report and what not to forget.
The regular control report is the first and main control report for the period to which all subsequent corrective and follow-up submissions relate. We can think of it as a baseline – this is the first time you tell the tax authorities what taxable transactions you have made and received in a given month or quarter.
When you prepare an audit return for a certain period, you always start with the regular return. In it, you provide all the information required by the VAT Act: in particular, the specific invoices, the customers and suppliers, their VAT numbers, tax bases, VAT rates and amounts. In the individual sections of the form, you break down the relationships with your business partners – who invoiced what to whom, in what amount and with what tax. A proper control report is therefore not just a summary number, but a detailed list of transactions, which the tax office then matches with the data of the other party (supplier or customer).
Timing is also important. The regular control report is due by the 25th day after the end of the month or quarter, depending on whether you are a monthly or quarterly payer. In practice, this is often done by first preparing a VAT return and then preparing a regular control report based on the same documents. The order in which you send the two forms is irrelevant – it is important that the two submissions fit together and are sent on time.
Since the regular control report is the first indication of your transactions to the tax authorities, it is worth paying close attention to it. If you prepare the correct return carefully and check the link to the VAT return, it will save you a number of problems – from subsequent calls for discrepancies to the need to file a correction or subsequent return.
It is also important to remember that any subsequent correction is based on the correct return. When you file a corrective control report, you are effectively saying ‘I withdraw the original regular report and replace it with this new version’. When you submit a subsequent control report, you are again relying on the original data of the regular report and replacing it with a correction submitted after the deadline.
The corrective control report is your emergency brake when you realise in time that the regular control report contains an error. Typically, this is a situation where you have already submitted the report but the deadline for submitting it has not yet passed – that is, the 25th day after the end of the period has not yet arrived. In this case, you simply replace the original regular return with a corrected control return, which is then taken into account, whereas the original version is not.
Once you find that the regular control report is wrong, you do not need to write to the tax office with any special explanation. You simply file a new, corrected control report, which will already contain the correct information. Remember, however, that the corrected tax return must be filled in again in full. This means that you transfer all the originally correct information to the form and only correct or add the incorrect information. The Revenue then takes the corrected control report as the only valid version, the original correct report is as if wiped out.
It also often happens that the same error is reflected in the VAT return – for example, a missing invoice affects both the control report and the sum of the tax and VAT bases in the return. In this case, it is advisable to file an amended VAT return for the same period at the same time, again within the correct deadline. It is important to distinguish here: if you are still within the deadline, you are filing a corrective return, not an additional one. The supplementary return only comes into play once the deadline for filing has passed.
A subsequent audit return comes into play when you realise that an audit return for a particular period is incorrect but you only find out after the normal filing deadline has passed. In this case, you can no longer file a correction report because the deadline for filing the correct report has passed, but you are obliged to file a subsequent control report.
You only have 5 working days from the time you discovered the error to submit a subsequent control report. The time limit is therefore not based on the end of the month or the date you originally submitted the report, but on the moment you discovered the error.
Again, the subsequent control report is not just a summary of the differences but a new complete version of the control report for the period. This means that you re-write in it all the originally correct data and correct or add the incorrect data at the same time. The tax office then treats this subsequent report as the current version. You are thus replacing the original regular (or previously filed corrected) return with this new return.
If an error in the control report also means that the VAT return does not match, it is often necessary to file a supplementary VAT return for the same period. A supplementary return is used when the tax liability changes after the filing deadline has passed.
It is particularly important not to delay the subsequent declaration. As soon as you spot an error, don’t wait and start working on correcting it immediately. Firstly, because of the strict five-day deadline and secondly, because any delay may lead to a notice from the tax office and, consequently, to penalties.
The control report primarily monitors domestic relations between VAT payers and matches specific documents between the supplier and the customer. The summary report, on the other hand, is mainly used for cross-border transactions within the EU (supply of goods, provision of services to another Member State) – without detailed identification of individual domestic partners.
Yes, the general rules of procedure say that if the end of the time limit falls on a Saturday, Sunday or public holiday, it is moved to the next working day.
Yes, the law does not exclude the number of submissions – but there is always only one current version that the tax administrator works with.
Now let’s summarize the typical scenarios we encounter in practice.
For example, you have filed a proper control report for April, but on May 20 you discover that one invoice issued is missing.
Procedure. You enter all the information again in the report, but including the corrected invoice. If the error also affected the VAT return, you file an amended VAT return.
As long as you get everything done by the deadline, this is not a late submission of the control report and therefore you do not incur a penalty for late submission of the control report.
For example, you have filed the correct control report for April on 20 May, but on 5 June, when you check the accounts, you discover that one invoice received under the reverse-charge scheme is missing.
Procedure. You will then submit a follow-up report for April (complete). If there is a change in the tax declared, you will file a supplementary VAT return.
If you have filed the correct return on time and are now just correcting the error, you will not normally incur a penalty – unless you exceed the statutory time limits for the subsequent return or are subsequently penalised for failing to comply with the notice.
This is the situation that most businesses dread. For example, you are a VAT payer and you have not filed either a VAT return or a control report for April.
At this point, you are charged a penalty of CZK 1,000 for late submission of the control report if you subsequently submit the report yourself, without a request from the tax office. However, if this is the first such penalty in the calendar year, it will be automatically forgiven (if you have corrected the error yourself without prompting).
Even so: the sooner you spot and correct the error, the better – both for clarity and because of the risk of further challenges and penalties.
The tax authority’s call for an audit report comes when the tax authority finds that you have not filed an audit report at all, or that the report you have filed does not match the data of your business partners, or has doubts about the accuracy or completeness of the data. In such a case, the tax office will send you a notice stating the period for which the control report is to be submitted, whether you are required to submit a regular control report or a follow-up control report, and the specific deadline within which you must respond.
If the notice is delivered to your mailbox, you have 17 calendar days from the time it is delivered to your mailbox to respond. If you receive the notice by other means, for example by post, the deadline is 5 working days from the date of delivery or notification of the notice. Crucially, you must only respond to such a notice by submitting an audit report – it is not enough to send a letter of explanation, a simple statement or an email.
It is definitely not worth ignoring a notice from the tax office. If you fail to meet the deadline for responding, quite severe penalties start to apply. If you submit the audit report within the deadline after the invitation, you may be fined CZK 10,000. If you fail to submit a follow-up audit report within the deadline, the tax office may impose a fine of CZK 30,000. And if you do not submit the control report even within the alternative deadline set by the tax authority, you may be fined CZK 50,000.
However, the tax office’s options do not end there. In addition to these automatic penalties, the tax authority may impose a fine of up to CZK 50,000 if you do not respond to the notice to remove doubts at all or if you respond in a way that does not comply with the requirements of the law – typically by failing to submit the required follow-up control report.
From 2023, these penalties are halved for a certain range of entities – e.g. for individuals, quarterly payers or certain limited companies consisting of only one person.
In the most serious cases, where the tax administrator assesses your actions as serious obstruction or hindrance of tax administration, the fine can rise to CZK 500,000. This is why a simple rule also applies: as soon as a call for an audit report lands in your inbox, treat it as a priority and deal with it without delay.
The term ‘zero control report’ is used in two different situations, which often leads to confusion.
You do not submit a control report if:
In this case, you are obliged to file a control report even if you do not actually report any transactions for the period . Typically, this is a situation where the tax office sends you a notice to file a control report for a certain period. You did not make any transactions in that period, but you are the payer. Therefore, in order to respond properly to the notice, you file a zero control report where you fill in zero values.
From the point of view of the Tax Administration, you thus clearly declare that you have nothing to report for the period in question, but at the same time you fulfil your obligation to respond to the call.
The VAT control report is a separate statement in which VAT payers report their transactions – they indicate specific invoices, suppliers, customers and tax amounts so that the tax administration can match them with the data of their business partners. It is submitted by the 25th day after the end of the period (legal entities always monthly, individuals according to their tax period). The basis is the regular control report, followed by any corrections: if you discover an error before the regular deadline, you file a corrective control report, which fully replaces the original report. If you discover the error after the deadline, you must submit a subsequent control report within 5 working days, often together with a supplementary VAT return.
A specific chapter is the zero control report. In a number of situations, no control report is submitted at all – typically if you are not a taxable person, you are only an identified person, or you have no transactions to report in the period, or you only carry out exempt transactions without deduction. You file a true zero control report when you are a taxpayer and the Revenue asks you to file but you really have nothing to report for the period – you then fill in the form with all zeros. The key to minimising penalties is to keep an eye on deadlines, respond to calls only by means of the control report (not just by letter or email) and correct any errors as soon as possible – as with fines, timely and proactive correction often determines how much or whether they are incurred at all.
For minor errors in practice, correct submission of a correction or follow-up report is usually sufficient. However, where significant amounts are involved, over a longer series of consecutive periods, or where the errors affect other tax obligations, it is wise to supplement the communication with an explanatory submission to the tax authority.
The request shall be made in writing to the tax administrator who imposed the fine. It should include a clear description of the reasons (e.g. emergency, objective obstacles, health reasons, technical fault) and evidence that you have remedied the situation as soon as possible. The tax authority has the option, but not the obligation, to waive the fine, so it is important to include everything that supports your request.
No. If you are not obliged to file a control report under the statutory rules (for example, you have no reportable transactions), you do not need to file a report – not even a zero report. However, a zero control report is typically a response to a tax authority’s request, and you are telling the tax authority that you really have nothing to report for the period.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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