The Constitutional Court found No 40 / 2017 Coll.
The Constitutional Court found on 6 December 2016, sp. zn.
Valid
40
FIND
The Constitutional Court
On behalf of the Republic
On 6 December 2016, the Constitutional Court decided under sp. zn. JUDr. Zdeněk Koudelkou, Ph.D., a lawyer, with the registered office of Optátova 46, 637 00 Brno, to abolish the provisions of § 100 paragraph 1 in the words "or control report" and the provisions of § 101c to 101i of Act No. 235 / 2004 Coll., on Value Added Tax, as amended, with the participation of the Chamber of Deputies of the Parliament of the Czech Republic as parties to proceedings and the Government of the Czech Republic as intervener,
as follows:
I. The procedure for the part of the application for annulment of the provisions of Sections 101g (3) and 101d (2) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., is hereby terminated.
II. Paragraph 101d (1) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., is deleted on 31 December 2017.
III. Paragraph 101g (5) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., is deleted.
IV. The remainder is rejected.
Reasons
Recital of the proposal and arguments of the appellants
1. On 3 December 2015, the Constitutional Court received a proposal from a group of 21 Senators ("the appellants') to abolish the provisions of Paragraph 100 (1) in the words" or a control report ', as well as to repeal the provisions of Sections 101c to 101i of Law No 235 / 2004 Coll. of 1 April 2004 on Value Added Tax, as amended ("the Value Added Tax Act'). The contested legal provisions govern the Institute of Control Reports established by Act No. 360 / 2014 Coll. with effect from 1 January 2016, which amended the Value Added Tax Act.
2. In the contested legal provisions, the appellants see a conflict with Articles 1 (1) and 2 (3) of the Constitution of the Czech Republic (hereinafter referred to as the Constitution) and Article 2 (2), Article 4, Article 10 (3), Article 11 and the fifth of the Charter of Fundamental Rights and Freedoms (hereinafter referred to as the Charter). The appellants also base their opinion on the inconstitutionality of the contested provisions on a contradiction with the constitutional regulation guaranteeing fundamental rights, because in their view, the constitutional regulation of fundamental rights creates an obligation on the legislator not to adopt a law that would threaten and restrict the constitutionally guaranteed fundamental rights. In addition, the appellants added that they proposed the repeal of all the contested provisions because they are internally linked and form one whole of the obligation to report checks, although the reason and intensity of the inconstitutionality are, in their view, different for each sub-provision.
Protection of privacy
3. In relation to the contested legislation on the protection of privacy, guaranteed acts of constitutional order, the appellants consider that, in the context of the periodic review report, the taxpayers of value added tax (hereinafter referred to as "VAT ') are obliged to communicate to the Financial Office confidential information about their customers and suppliers. The appellants are aware, in their opinion, that the specific scope of these data is determined in accordance with Section 101d of the Value Added Tax Act by a form issued by the tax administrator, which is not yet published in the definitive version at the beginning of December 2015, i.e. shortly before the contested provisions are effective, thus not exactly all the required data are known. However, the appellants object to the inconstitutionality of the law, not to the forms of the tax administrator (financial administration). In this connection, it submits that the contested provisions of the law, in particular Article 101c (1) (a) of the Value Added Tax Act, which provides for the tax payer to submit a check report if he has carried out taxable transactions with the place of performance in the country or has received a remuneration before the date of such transactions, allow for the collection of any data relating to taxable transactions provided and not paid to value added tax. If such a circumstance eventually occurs, the appellants' view is that financial management is keen to issue the form. The appellants are therefore convinced that, notwithstanding the specific wording of the financial management form, the provisions of the law which allow such an option are unconstitutional. The appellants specifically state that the inspection reports must also be submitted by lawyers and refer to the opinion of the Czech Bar Association, according to which, in view of the impact on the obligation of confidentiality and confidentiality of legal services, the State is given an instrument by which it can monitor payments between lawyers and their clients, their amount, frequency, frequency. In the view of the Czech Bar Association, the control reports as to the guarantee of the right to legal aid significantly reduce the protection of the client against State interference.
4. Furthermore, the appellants argue that the obligation of confidentiality of individual tax office workers does not guarantee that the collected data does not fall into the hands of unauthorised persons. The collection of such data, in the law of an indefinitely defined scale, constitutes an unparalleled intervention in the rights defined by the Charter. Moreover, according to the appellants, this intervention can be regarded as a breach of the essential requirements of the democratic rule of law, to which the principle of proportionality within the meaning of Article 4 (4) of the Charter can be attached. From Article 10 (3) According to the promoters, everyone's right to privacy, including protection against unauthorised collection of personal data, is exercised. This subjective right embodies objective requirements for the rule of law. The legislature cannot, in any way, encompass any collection of data, but even in its legal capacity, the legitimacy, necessity and rationality of such collection and the proportionality of the interests of collecting such data as compared to the protection of privacy must be assessed. The appellants believe that any collection of personal data, even if permitted by law, carries the risk of their misuse. They believe that efforts to prevent tax evasion are in the public interest, but cannot automatically justify an extensive breach of the right to privacy, including the protection of personal data. Thus, according to the appellants, a part of the executive authority receives a significant amount of information without excluding their abuse.
5. The applicants believe that the possible extent of the information provided cannot be justified by the formally declared attempt to limit tax evasion. The essence of these tax evasion is, in their view, that the taxpayers of the tax are to be deducted for taxable transactions that have only been formally carried out. According to the advocates of the amendment, it is the control report that is supposed to pair the right to deduct VAT from one entity with a tax liability from another. However, in order to apply the deduction, the person who applies it must be the payer. From this point of view, the appellants consider it unfounded that the law also allows the reporting of taxable transactions for non-VAT payers who cannot apply any deduction. The appellants point out here that the actual extent of the data collected will be determined by the financial management by means of a form, and can therefore establish it in such a way that it does not relate to data on non-payment of VAT and will be less comprehensive in terms of data collection, but may also provide for it to relate to data on VAT and the amount of data obtained will be extensive. According to the promoters, the contested laws allow executive power to introduce the Orwellian world, where the state collects a lot of information that it doesn't even want to use right away, but which sometimes, for someone, against someone and for the benefit of someone, can be useful.
Reservation of the Law
6. The appellants shall also oppose the contested legislation as regards the reservation of the law and the limits on the imposition of obligations within the meaning of Article 2 (4) of the Constitution and Article 2 (3), Article 4 (1) and (2) and Article 11 (5) of the Charter, pointing out that Paragraph 101d of the Value Added Tax Act in paragraph 1 only generally and insufficiently provides that the payer is required to provide the information necessary for the administration of the tax without further determination. The law may, in the appellants' view, establish a form, but it is intended to ensure consistency of the submission and possible details of the submission; not initially establish obligations. The scope of the mandatory data communicated must be regulated in the law. In this context, the appellants claim that the Government does not in fact impose a law in the explanatory memorandum to Act No 360 / 2014 Coll., but merely a form of financial administration, which makes it all easier and more flexible, regardless of constitutional principles. By law, the government, according to the appellants' beliefs, achieved the transfer of the content and scope of the obligations imposed on the executive power not by means of a substatutory implementing law (Decree, Government Regulation), but by form of a form of financial administration. The appellants state that, in the case of a control report, it is not a simple obligation but also an obligation that distorts the right to privacy as a constitutionally protected fundamental right, and therefore the reservation of the law is necessary. It cannot be accepted that executive power is deliberately bypassing the legislative process by allowing itself, through the current majority of governments, to be authorised in the law to impose specific restrictions on constitutional law by a mere form of financial administration, which in itself is not even a rule of law in the traditional concept, although it actually appears as a legislative act in this situation. Such a legal provision is, according to the appellants, a de facto empowerment law which transmits the legislator's rights to executive power. The appellants referred here to the conclusions of the Constitutional Court sp. zn.
7. The appellants also refer to Article 11 (5) of the Charter, which provides that taxes and charges may only be imposed by law. In their view, this provision cannot be interpreted in the strict sense of the word only by the law establishing tax and tax rates, but by an extension of the interpretation that the legislator is to directly regulate all fundamental and essential tax obligations, including those relating to tax administration and tax control. That is why the content of the mandatory data in the control report should have been regulated by law and not just by the form of financial administration. According to the plaintiffs, such a procedure is a protection against abuse of power. The fact that Paragraph 101d of the Value Added Tax Act effectively converts the determination of the scope of the information contained in the financial management control report to be contrary to the constitutional directive providing that obligations must be imposed by law, by law and the limits of fundamental rights may only be laid down by law. The form of financial administration, according to the appellants' court, effectively acquires the unconstitutional status of legislation and contains a general (regulatory) regulation which should contain the law itself.
Penalties and defence against them
8. The appellants also oppose the question of consistency with the provisions of Paragraph 101h (1) of the Value Added Tax Act, which provides for fines for infringements of the obligations to submit ex-audit reports, which they consider to be contrary to the right to a fair trial. The contested provision introduces fines directly from the law without allowing any authority to examine in the proceedings why a breach of the legal obligation took place and, accordingly, to moderate their amount, since de facto the lower limits of fines are not set. In the appellants' view, it cannot be taken into account whether, for example, a small entrepreneur has failed to comply for an justifiable reason. Such sanction automation leads to the fact that the law is not found by the competent administrative authority, which can assess the matter individually, but in fact a specific penalty is laid down directly by the legislator. This does not ensure protection of the right in due process. The appellants refer here to the finding of the Constitutional Court sp. zn. Pl. ÚS 24 / 14 of 30 June 2015 (N 123 / 77 CollNU 867; 187 / 2015 Coll.), in which, while the automatic penalty by law has been dealt with as a constitutionally conformal and subject to a percentage in the contested provision, this takes into account the gravity of the tax offence and the income ratios of the person affected from whom the tax is derived. In the case of control reports, this is a situation where the penalty is set at a fixed amount in crowns for all, regardless of the reason for the infringement of the law and the income and property ratios of the VAT payer. This makes the provision unconstitutional according to the applicants. There is no right to legal protection because there is no procedure in place in which the payer could exercise his reasons for his benefit, and because the fine interferes with his property, the constitutional protection of ownership under Article 11 (1) and (4) of the Charter is thereby undermined.
Proportionality - small versus large
9. The appellants also consider that the contested legal provisions will not stand in the proportionality test. In particular, they argue that proportionality must also be assessed in relation to entities which are burdened by the new obligation. Finally, the current law, in their view, sets the limit of turnover for the mandatory registration of VAT payer CZK 1 000 000 within the last 12 months, however, by way of derogation the obligations for payers with turnover of up to CZK 10 000 000, who may have a calendar quarter for the tax period due to easier administration, while the basic tax period is monthly. According to the applicants, the legal reason for this modulation is that the burden on small entrepreneurs and the fact that tax evasion really affects the state takes place in large business. However, the provisions relating to the control report do not respect the existing different approach of the law and introduce an obligation for each payer, regardless of its size, with only natural persons being allowed to report on the dates for filing the tax return (i.e. quarterly). The appellants consider that a specific impact on certain types of persons needs to be assessed from the point of view of material constitutional law. Thus, the obligation can be seen as unconstitutional if it burdens the same large and small entrepreneurs. The impact on small entrepreneurs compared to large ones is said to be much more adverse, with the intensity of unconstitutionality. In this respect, the appellants referred to points 19- 22 of the Constitutional Court's finding of sp. zn.
Too short a deadline
10. The appellants also consider, in the provision of Section 101g of the Value Added Tax Act, the legal period of 5 days to correct the error in the submission of the control report to be totally insufficient, with a high degree of penalty particularly for small payers who do not have specialised employees in this area. In particular, the appellants state that the material interference in the rights of persons is already that Paragraph 101g provides for an obligation in calendar days rather than working days, as for example the previous Paragraph 101f (2) of the Value Added Tax Act does. It is known to the appellants that the Constitutional Court has already recognised, by finding sp. zn. Pl. ÚS 24 / 14 (see above) as a constitutionally conformal § 250 of Act No. 280 / 2009 Coll., Tax Code, as amended (hereinafter referred to as the "Tax Code '), but that the provision of the Tax Code states 5 working days, which they consider has a completely different material impact than 5 days under the contested provision of § 101g of the Value Added Tax Act. If the contested provision does not specify a time limit on working days, the appellants consider that it is a calendar period. The establishment of a short deadline for the fulfilment of the obligations set out in Section 101g of the Value Added Tax Act in calendar days, while elsewhere the tax rules apply the time limit on working days, is without an important, reasonable and legitimate reason. This provision will not stand in the light of the proportionality test, as the tax system of the State would certainly not collapse or be in any danger if the deadline were longer, for example on working days. The appellants believe that the inconstitutionality of the contested provisions is also due to a materially more severe impact on a small VAT payer, which carries on the same obligation as large entities.
11. In conclusion, a group of 21 Senators presented in its proposal, to illustrate their arguments, partial objections concerning the impossibility of matching invoices for the control of tax entities, the value of the data collected for a third party (knowledge of the market environment) and the burden on the taxpayer of other costs related to the control report and proposed that the Constitutional Court should abolish the legal provisions contested by its finding.
Observations of the parties
12. The Chamber of Deputies of the Parliament of the Czech Republic, as a party to the proceedings, signed by its President Jan Hamakk, has described the legislative process of adopting the contested provisions of the Value Added Tax Act, which is confirmed by the fact that the draft law No 360 / 2014 Coll. was adopted following a properly implemented legislative process, while the legislature acted in the belief that the contested provisions were in accordance with the Constitution, the Charter and the Rules of Law of the Republic. Finally, the President of the Chamber of Deputies stated that it was entirely up to the Constitutional Court to examine and rule on the application for annulment of the contested legal provision.
13. The Senate of the Parliament of the Czech Republic as a party to the proceedings, signed by President Milan Štěm, summed up the arguments of the appellants and summarised the course of the legislative process of adopting the contested provisions with reference to the speeches and opinions of some of the senators during the discussion of the bill on the Senate. Finally, the President of the Senate stated that it was entirely up to the Constitutional Court to examine and rule on the application for annulment of the contested legal provision.
Observation of the intervener
14. The Government of the Czech Republic, as an intervener in the proceedings in its observations signed by the Minister for Human Rights, Equal Opportunities and Legislation, Jiří Dienstbier and drawn up in cooperation with the first Deputy Prime Minister and Finance Minister Andrei Babiš, summarized the main points of the appellants' argument on the unconstitutionality of the contested legislation. The Government subsequently submitted detailed criticisms to the various headings of objections.
To protect privacy
15. As regards the appellants objected to by the constitutionally non-conformal intervention of the Privacy Control Report, the Government stated that, in order for the tax administrator to be able to correctly ascertain and establish the tax, it must, inter alia, obtain the necessary information. This information enables him to carry out the necessary actions, to conduct appropriate procedures and, as a result of tax, to determine and, where appropriate, to secure payment. With regard to the extent of the data the tax administrator has the power to obtain and collect, pursuant to the provisions of § 9 (3) of Act No. 280 / 2009 Coll., the tax administration may collect personal data and other data, if necessary for tax administration, only to the extent necessary to achieve the objective of tax administration. The notional control for the extent to which information can be requested is a test of the need for tax administration. In the view of the Government, exceeding it would be a departure from the jurisdiction of the tax administrator, i.e. ultra vires.
16. In the view of the Government, the provision of data by tax entities is crucial for tax administration. The tax administration is a process characterised by the fact that the burden and obligation of the claim and the burden and obligation of proof lie with the tax entity. According to Section 135 (2) of Act No. 280 / 2009 Coll., the tax system, the tax entity itself is obliged to quantify the tax and to provide the prescribed information as well as other circumstances relevant for the assessment of the tax. According to Section 92 (3) of Act No. 280 / 2009 Coll., the Tax Code, the tax entity demonstrates all the facts which it is obliged to state in tax claims and other submissions. According to the Government, tax administration is based on the fact that tax entities cooperate with tax authorities and provide them with the data needed for tax administration. If the appellants contest the provision of data to the tax administrator, they implicitly question the very nature of the tax administration. The scope of the data that can be requested here is thus defined in the same way as a number of other tax law institutes intended to collect information. The legal mandates of the value added tax payers' obligation to provide the tax administrator with the data or, respectively, with the authority of the tax administrator to request and collect those data are defined by law, namely the Value Added Tax Act and the general tax administration regulation - the Tax Code.
17. The Government considers that, in relation to Act No. 101 / 2000 Coll., on the Protection of Personal Data and on the Amendment of Certain Laws, as amended, ("the Act on the Protection of Personal Data"), the Tax Code has a special status. The protection of personal data collected during tax administration is, in its view, dealt with in a very comprehensive manner in the tax rules, especially with regard to the public administration and the obligation to remain silent. The Act on the Protection of Personal Data provides for the specific role of tax administration, since the provision of Section 3 (6) (f) provides that part of its rules (namely Sections 5 (1), (11) and (12)) does not apply to the processing of personal data necessary for the performance of the duties of the administrator laid down by specific laws to ensure the significant financial interest of the Czech Republic or the European Union, namely the stability of the financial market and currency, the functioning of the money circulation and payment transactions, as well as budgetary and tax measures. If the tax administrator also collects other data (based on a wider definition of competence in § 9 (3) of Act No. 280 / 2009 Coll., Tax Code), the amendment of the Act on the Protection of Personal Data will be applied in full by the Government. In this context, the Government has also referred to specific rules on the protection of personal data, including the supervisory competence of the Office for the Protection of Personal Data or the obligation of official persons to maintain confidentiality of everything they have learned in connection with the administration of taxes and the related penalties for its infringement. The Government also mentioned the measures taken in both personnel and technical terms to eliminate possible misuse of data by the financial administration. The Government does not share the position of the appellants who, at the Institute for Control Reports, see "non-portional intervention 'in the rights of the parties concerned. On the contrary, it considers that the proportionality test is met in the present case, which it further drew closer to in its observations.
18. Furthermore, the Government outlined the basic principles of the functioning of the control report as a tax institute and stressed that the data obtained in the control report is already required by the payer to keep the records for value added tax purposes, so that the tax administrator can ascertain the data on an ad hoc basis. Only the obligation to report these data regularly to the tax administrator is newly established.
On the question of penalties for failure to fulfil obligations (hl. § 101h)
19. On the question of penalties for failure to comply with the obligations of the inspection report, the Government stressed that the appellants' presumption that, if the tax administrator finds irregularities in the control report, a fine of CZK 1,000 is automatically imposed is not true. The obligation to pay the fine provided for in Section 101h (1) (a) of the Value Added Tax Act arises from the law only if the inspection report is late, thus the penalty is not imposed for an irregularity in the control report, but for failure to comply with the statutory obligation to submit the inspection report on time, i.e. no action; Similarly, this applies to the other appellants of that fixed fine. On the contrary, only a fine, the amount of which is set by an interval of up to CZK 50 000 under Section 101h (2) of the Value Added Tax Act, can be imposed for irregularities in the control report submitted. In this respect, the principle of individualisation of the sentence as well as other basic standards of punishment resulting from constitutional order will be fully applied. The Government also rejected the reservations of the appellants of the parties to the unconstitutionality of the penalties imposed by law and recalled that, in the context of assessing the constitutional conformity of automatic penalties, it is not the only criterion that the sanction is imposed without the possibility of administrative reflection on its amount, but also the overall impact of the sanction on the perpetrator and the type of seriousness of the criminal conduct involved.
20. The Government rejected the appellants' reference to the Constitutional Court's finding of 13 May 2014, sp. zn. In this connection, it pointed out that, in the case of a control report, it is not an intervention in the property sphere comparable to the need to pay bail. There is no doubt that the audit report has some potential to increase administrative costs on the part of the operators concerned, but the quantification of these costs would be entirely different from the obligation to make bail of CZK 5 million. Moreover, the costs in question are not constant, according to the Government, and their level is thus proportional to the volume of the business. Contrary to bail, these costs are fully individualised.
21. With reference to the findings of the Constitutional Court sp. zn. The nature of the area of legal relations to which certain penalties apply may, in itself, constitute an important factor for assessing proportionality of a fixed penalty. The Government has expressed its belief that the fines contained in the contested provisions of the Value Added Tax Act will meet these requirements, as the fine may, in a particular case, acquire four different legal levels, which are graduated according to the seriousness of the criminal conduct. This is not an independent error, but a logically linked and graduated range of penalties, which, according to the Government, can be described as not providing a control report within the prescribed time limit, and which, in each case under Paragraph 101h (1) of the Value Added Tax Act, takes different serious forms.
On the question of short periods (Sections 101f and 101g)
22. With regard to the appellant's disproportion of the replacement five-day period for the submission of a follow-up check report where the tax administrator sees an irregularity in the control report data (see Section 101f (2) of the Value Added Tax Act), the Government stated that a period of five calendar days was not set without purpose. In fact, it reflects the obligation of the tax administrator within 30 calendar days of the submission of the claim to decide whether a procedure to remove doubts will be initiated (Section 89 (4) of Act No. 280 / 2009 Coll., Tax Code). This must be done within 30 days by "pairing" data from control reports in at least two steps. As part of the second step, the government considers that the inspection reports, which were not submitted in time, will be included and irregularities that have been made by a mere involuntary error, will be remedied. These two procedural steps require the delivery of the tax administrator's call for a control report or follow-up report in the event of data irregularities and the time set for the response of the payer. Although the time set for the payer's response is set at five calendar days, it should be borne in mind that the main communication channel is a data box. If the payer has access to the data box, the invitation under Section 101g of the Value Added Tax Act is delivered to the data box. The five-day period will therefore not start until the call has been notified. The tax administrator therefore, in the view of the Government, must take into account the time taken to take over the report. It can reach or exceed 10 days. The final moment is given when the delivery fiche occurs on the ground that the payer does not register for 10 days (Section 17 (4) of Act No. 300 / 2008 Coll., on electronic operations and authorized conversion of documents). Thus, according to the Government, it is not possible to agree to the argument about the impossibility of drawing on proper leave or to use holiday days to take advantage of the holiday, as the entity concerned has a further ten days to take over the received call in addition to five calendar days.
The objection to the reservation of the law
23. On the objection of the reservations of the law, the Government stated that the Institute of Form Submissions and the collection of data needed for tax administration on their basis were not unusual in the legal system. In the tax field, they are traditionally included in the legal order at least since 1992 under the regulation of Act No. 337 / 1992 Coll., on the Administration of Taxes and Fees. The Government has pointed out that the Institute of Forms is currently included in a wide range of rules on both tax law and other sectors of public law. At the same time, the Government stressed that the obligation to make and enter the prescribed data was laid down by law, in the case of a control report, namely the provision of Section 101d (1) of the Value Added Tax Act. At the same time, according to the government, the law determines the extent of the required data, namely that it can only be the data needed for tax administration. Although the law does not explicitly mention the specific data contained in the form, its circuit is not barefoot and there are legal mandinels that restrict it. First of all, the government believes that the required data should be used to fulfil the basic objective of tax administration (i.e. the correct identification and determination of taxes and the security of their remuneration).
24. The tax administrator may not require information that is beyond the basic objective of tax administration. At the same time, fundamental principles of tax administration must be investigated. In the case of control reports, the legal mandinels are not only derived from the Value Added Tax Act (see Section 101d (1)), but also from the tax rules and constitutional rules. Legal standards cannot be read in isolation and need to be assessed as a whole. By providing the data required in the form, the tax entity does not provide data other than that it would be obliged to provide in the context of an individual interaction with the tax administrator. Hypothetically speaking, the tax administrator could request all the information in the control report separately from each mandatory entity without any specific obligation to submit a control report, but such a procedure is not only technically and economically unfeasible, but would also be a denial of the meaning of the control report, the positive effect of which is mainly based on the speed of data acquisition and synchronisation.
(No) possibility of procedural defence against the request of the administrator - data
25. The Government also rejected the appellants' complaints as to the possibility of procedural defence of tax entities against the request of the tax administrator to provide data. It argues that, as in the case of the unlawful requirement to provide data in individual interaction with the tax administrator (e.g. when carrying out a tax check), the requirement to provide the data contained in the form may be rejected if the tax entity considers that the data are required illegally. The tax administrator will then invite the tax entity to supplement the data not provided in the form [see Section 101g (2) of the Value Added Tax Act, or generally Section 11 (1) (d) of Act No. 280 / 2009 Coll., Tax Code]. The invitation is a procedural decision against which you cannot appeal (see Section 109 (2) of Act No. 280 / 2009 Coll., Tax Code). If the tax entity fails to comply with the tax administrator's request and the data in the control report are not met, a fine of CZK 30 000 will be imposed [see Section 101h (1) (c) of the Value Added Tax Act]. An appeal shall be admissible against this decision. The decision of the appellate body on the fine, as well as the decision by which the tax authority invites the tax authority to complete the control report, may be brought before the court by action against the administrative decision. Although the current practice (not only for control reports, but within the whole area of form submissions) shows that there are no disputes in this area, the legislation contains the means by which a tax entity may seek protection of its rights. Therefore, it cannot be agreed with the appellants who see the absence of the possibility of protection in that the constitutional conformity of the tax administrator's form cannot be reviewed by the Constitutional Court following the legal procedure. It is precisely because the form is not a law, but simply by specifying the legal power of the tax administrator to require the data necessary for tax administration from the tax entity, the general court is also competent to assess its legality.
26. In the conclusion of its proposal, the Government briefly responded to the appellants' partial objections concerning the impossibility of matching invoices for the control of tax entities, the value of the data collected for the third party and the burden on the taxpayer of additional costs with the control report related to the possible effects of the annulment of the contested provisions and the requirement to withdraw the contested legal provisions.
Replication of the applicants
27. The observations of the parties and the intervener were sent by the Constitutional Court to the appellants for a possible reply. In their reply, they maintained their proposal to abolish the contested provisions of the Value Added Tax Act and the argument contained therein.
28. The appellants objected to the Government's claim that, if the tax authorities are challenging the provision of the data, they are implicitly attacking the very nature of the tax administration and stated that they do not generally think that the tax authorities are to be provided with data, but that it should not be on the liking of the tax administrator, which data will be, and these data are to be determined by law, especially by law, not by the unfettered transfer of this power to financial administration. The reference to the general principles contained in the tax rules is not considered by the appellants to be a sufficient guarantee of constitutional rights, which can be limited, but only by law, not by the forms of the executive authorities. If the government considers certain information necessary for tax administration, the appellants ask why it did not set it in the law.
29. Furthermore, the appellants claimed that the Government's statement contradicts the need to distinguish the materially different impact of formally the same obligation on small and large tax entrepreneurs. The appellants have a comical influence on the government's efforts to defend sanctions automation, when, in their view, the government consistently recognised the imperfections of the contested provisions by proposing to change them by means of an amendment to the law.
30. Critically, the appellants also commented on the Government's remark that the assertion of the appellants, who seek to give the impression that the construction is the product of the current government and is solely related to the control report, is not based on the truth. In their words, the applicants do not give the impression that forms are not used here. However, they criticise the fact that the content of the VAT control reports forms is the legal possibility to list a number, even very sensitive, of data not only about themselves, but also the obligation to mention it about its customers, including non-VAT. In cases referred to by the Government, the applicants argue that the forms submitted by different persons to the public administration are self-data, not other ones. The obligation to provide information which may endanger privacy is to be laid down in law or in general by law and not by form.
31. Finally, in the appellants' opinion, the form could be issued by the Ministry of Finance as an implementing legislation. Here, too, it would be questionable whether at least the basic scope of the information provided in the form should be laid down by law (e.g. in the form of an annex to the law), but the form issued in the form of a decree would not be excluded from the abstract control of the constitutionality and legality of this legislation. According to the appellants, the government was probably aware of the problem of the chosen solution, so it went through the tax administration form, which is not issued in the form of a statutory law, so that the matter was not under the control of the Constitutional Court.
32. The appellants also rejected the Government's reasoning that, in disagreeing with the form, the tax entity can obtain its control by refusing to provide the data, having a fine imposed and then starting the judicial review process, which they find to be ridiculous from the point of view of practice. If this were to be a solution, the appellants did not need to introduce abstract control of legal standards at all and in nothing. However, this is the original and main feature of the constitutional judiciary of the "Weyrov-kelsen" type, not today's rampant constitutional complaints on specific matters.
33. Finally, the appellants noted that the government was haunted by the consequences of the repeal of the law. But the abolition of the contested parts of the law does not mean a resignation to fight tax evasion, but a position with unconstitutional practices of government and parliamentary majority. Parliament will, according to the applicants, have the opportunity to return to the issue and to adapt it in a constitutional manner.
The Ombudsman's observations
34. At the request of the Constitutional Court pursuant to Article 69 (3) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, (hereinafter referred to as the Law on the Constitutional Court), the Ombudsman informed the Ombudsman that he would not enter into the proceedings for the annulment of the contested provisions of the Value Added Tax Act.
Abandonment of oral proceedings
35. The Constitutional Court, in accordance with the provisions of Paragraph 44 of the Law on the Constitutional Court, considered that there was no need to conduct oral proceedings in the case, since it would in no way contribute to a further or more detailed clarification of the case than it had been aware of from the written acts of the parties and interveners. The fact that the Constitutional Court does not consider it necessary to carry out any evidence justifies the failure of oral proceedings. Neither the parties nor the intervener requested the oral hearing to be held.
Terms and conditions of the formal assessment of the proposal
36. The Constitutional Court finds that it is competent to discuss the application for annulment of the contested legal provisions and that the motion of a group of 21 Senators fulfils all the formal requirements laid down by law and has been submitted by persons entitled [Paragraph 64 (1) (b) of Act No. 182 / 1993 Coll., on the Constitutional Court]. It also finds none of the grounds for inadmissibility of the proposal.
37. However, during the proceedings before the Constitutional Court, the two contested provisions of the Value Added Tax Act were partially amended. By Act No. 113 / 2016 Coll., amending certain laws in connection with the adoption of the Act on the Registration of Sales, the second paragraph of § 101d of the Value Added Tax Act (point 2 of Part Two of the Second Amendment Act) was repealed with effect from 1 May 2016. The third paragraph has now become the second paragraph. Furthermore, by Act No. 243 / 2016 Coll., amending certain laws in connection with the adoption of the Customs Act, the provision of Paragraph 101g (3) of the Value Added Tax Act was inserted as "5" of the word "working" (paragraph 35 of Part Thirty-Third Amendment Act), with effect from 29.7.2016. Since the appellants seek the annulment of the provisions in question, as amended by Act No. 360 / 2014 Coll., i.e. in their original version, without taking this into account by a later amendment to the petition, the conditions for partial termination of the procedure within the meaning of the provisions of § 67 (1) of Act No. 182 / 1993 Coll., on the Constitutional Court, were fulfilled, and the Constitutional Court, by way of order No 360 / 2014 Coll., by way of order I of the application for annulment of the provisions of § 101d (2) and § 101g (3) of Act No. 235 / 2004 Coll., on the value added tax, as amended by Act No. 360 / 2014 Coll., has, suspended to that extent.
38. At this point, the Constitutional Court considers it appropriate to note that, as regards only the partial amendment of the provisions of Paragraph 101g (3) of the Value Added Tax Act, the Constitutional Court found that it was essential in relation to the appellants' objections to the amendment. In fact, the appellants see the inconstitutionality of the time limit in the provision in question in its shortness, mainly due to the fact that it is a period calculated according to calendar days. In the proposal, the appellants explicitly state that "material interference in the rights of persons is in the fact that Paragraph 101g is set in calendar days, not working days... '. As the amendment made the deadline in question, calculated on working days, the appellants' argument in this matter became irrelevant. The legislature itself changed the law as requested by the appellants. Therefore, the Constitutional Court also took part in the partial termination of the proceedings, in accordance with its current view on the application of Paragraph 67 (1) of Act No. 182 / 1993 Coll., on the Constitutional Court, expressed, for example, in the sp. zn. On this issue, he stated that if there is a change which is not relevant for the purposes of assessing the constitutionality of the whole of the contested provision, it is not a case to which the provision of Act No 182 / 1993 Coll., on the Constitutional Court, would result in the termination of proceedings (see Part VII / c of the cited finding). In the present case, however, the situation is the opposite, and the Constitutional Court has therefore also taken part in the partial termination of proceedings here.
39. In the remainder of the proposal, all the conditions for its meritative assessment are fulfilled.
Assessment of the constitutional conformity of the legislative process
40. The Constitutional Court first assesses whether the contested law has been adopted and issued within the limits of the constitutional competence and the constitutionally prescribed way. In the present case, the Constitutional Court found, on the basis of the observations of the parties to the proceedings and of the parliamentary press, publicly available at http: / / www.psp.cz, that the contested provisions of the Value Added Tax Act had been adopted within the limits of the Constitution established competence and in a constitutional manner. Indeed, even the appellants themselves raised no objections to the legislative procedure.
Derogation of the contested legal provisions
41. Paragraph 100 (1) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended, reads as follows:
"(1) The payer or the person identified shall keep in the records for value added tax purposes all data relating to their tax obligations, broken down by the information required for the compilation of the tax return, summary report or control report. ';
42. Paragraph 101c of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., reads:
Obligation to submit control reports
(1) The payer shall submit a check report if:
(a) has carried out taxable transactions with the place of performance in the country or has received payment before the date of such transactions;
(b) accept taxable transactions with the place of performance in the country or have made a payment before the date of such transactions;
(c) under the special scheme for investment gold
1. accept an intermediary service for which a tax has been applied pursuant to Paragraph 92 (5);
2. has carried out the supply of exempt investment gold for which he is entitled to deduct pursuant to § 92 (6) (b) and (c); or
3. has produced or converted gold into investment gold pursuant to § 92 (7).
(2) The control report for the company is submitted by the designated partner who gives the tax return for the company. '
43. Paragraph 101d of Act No. 235 / 2004 Coll., on Value Added Tax, as amended, reads:
Formats and method of submitting the control report
(1) In the inspection report, the payer is required to provide the prescribed data required for tax administration.
(2) Where the control report is submitted by means of a data report requiring additional confirmation, it shall be confirmed under the conditions laid down in the tax rules within the time limit for submitting the control report. ';
44. Paragraph 101e of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., reads:
Time limits for submitting the control report
(1) The payer who is a legal person shall submit a check report for the calendar month within 25 days of the end of the calendar month.
(2) The payer who is a natural person shall submit a check report within the time limit for filing the tax return.
(3) The time limits referred to in paragraphs 1 and 2 cannot be extended. "
45. Paragraph 101f of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., reads:
Corrective and follow-up control reports
(1) Before the deadline for submitting the check report, the payer may replace the check report which he has already submitted by a corrective control report; the previous inspection report shall not be taken into account.
(2) If the payer finds, after the deadline for submitting the control report, that he has provided incorrect or incomplete information in that control report, he shall be obliged to submit a follow-up check report within 5 working days of the date of the finding of incorrect or incomplete data.
(3) The provisions on the control report shall apply mutatis mutandis to subsequent control reports, unless otherwise provided by law. ';
46. Paragraph 101g of Act No. 235 / 2004 Coll., on Value Added Tax, as amended, reads:
Procedure for non-compliance with control reporting obligations
(1) If an inspection report has not been submitted within the prescribed time limit, the tax administrator shall invite the payer to submit it within a period of five days from notification of the request.
(2) The tax administrator shall examine and, where appropriate, examine the data contained in the control report and, in case of doubt as to the accuracy or completeness of the data, invite the payer to amend or supplement the data and, where appropriate, confirm the original data.
(3) The payer shall, within 5 working days of notification of the call referred to in paragraph 2, amend or supplement the incorrect or incomplete data or, where appropriate, confirm the original data by means of a follow-up check report; where the subsequent control report is not submitted in time, paragraph 1 shall not apply.
(4) The tax administrator shall deliver an electronic call for inspection by means of:
(a) data boxes; or
(b) public data networks to the electronic address of the payer for that purpose, provided that the payer is not made available to the data box.
(5) The invitation to be sent via the public data network to an electronic address shall be deemed to have been received at the time of dispatch by the tax administrator.
(6) Where a payer who does not have a data box available has not yet communicated an electronic address to the tax administrator, paragraph 4 shall not apply. ';
47. Paragraph 101h of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., reads:
Consequences of infringement of the control reporting obligation
(1) If the payer does not submit an inspection report within the time limit set, he shall be required to pay a fine of:
(a) 1000 CZK, if it is subsequently submitted without being called upon to do so,
(b) 10 000 CZK, if it is submitted within a period of time after the tax administrator has been asked to do so,
(c) 30 000 CZK, unless it is submitted following an invitation to amend, supplement or confirm the information contained in the control report; or
(d) 50 000 CZK if it is not submitted within the time limit.
(2) The tax administrator will impose a fine of up to CZK 50 000 on the payer who, at the request of the tax administrator, will not change or complete incorrect or incomplete data by means of a follow-up check report.
(3) In addition to the fine referred to in paragraph 1 or 2, the tax administrator shall impose a fine of up to CZK 500 000 on those who, by failing to fulfil the obligation relating to the inspection report, make the tax administration seriously difficult or obstruct.
(4) The tax administrator shall decide on the obligation to pay the fine referred to in paragraph 1 by means of payment and shall prescribe it in the tax records at the same time.
(5) The fine referred to in paragraphs 1 to 3 shall be payable within 15 days of the legal authority of the decision on the fine.
(6) In determining the amount of the fine referred to in paragraphs 2 and 3, the tax administrator shall ensure that the fine is not in gross disproportion to the importance of the infringement and to the seriousness of the consequences for tax administration. In doing so, it shall take into account in particular the degree of cooperation of the payer. ';
48. Paragraph 101i of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., reads:
Deadline for the termination of control reporting obligations
(1) Compliance with control reporting obligations may be required until the deadline for the determination of the tax has expired.
(2) The fine may be imposed or decided on the obligation to pay it no later than 3 years from the date on which the infringement occurred. '
General bases of the constitutional review of tax legislation
49. In its decision-making practice, the Constitutional Court has already addressed the issue of the review of legislation in the field of tax and tax legislation, and has formulated some fundamental points of reference for the constitutional review of legal acts in the field of social relations.
50. v zn. pl. ÚS 18 / 15 of 28.6.2016 (271 / 2016 Coll.) The Constitutional Court found that the determination of tax liability and effective collection of taxes were vital for the proper functioning of the State and society. Taxes depend not only on financial saturation of public budgets and the operation of the state apparatus, but also on the implementation of economic, cultural, educational, security, defence and social policy. He stressed that finding an optimal model of tax burden was extremely complex and absolutely requires taking into account many dynamic factors of economic, demographic, mathematical and statistical and other. In this context, he did not forget to mention that the issues of optimal tax burden are typically among the so-called political issues, i.e. those issues whose solutions result from social consensus, preferences, population values, population mentality, traditions, etc. In the view of the Constitutional Court, the determination of the tax burden is among the most controversial issues in competing political parties and movements and plays a crucial role in electoral preferences. These are therefore issues on which the composition of Parliament and other representative bodies of all degrees and the composition of the government depend, and their transformation into tax legislation depends on the political representation of elections. The environment in which this process takes place is, above all, represented by Parliament and other representative bodies representing a wide range of social interests (see paragraphs 71 to 75 of the above mentioned finding).
51. In view of the above, the Constitutional Court cannot therefore assess the optimity of the tax system or assess tax laws from the point of view of fulfilling the fundamental functions of the tax. As already stated in the find, e.g. in sp. zn. If the Constitutional Court had acceded to it, it would have entered into the field of individual policies whose rationality cannot be well assessed from a constitutional point of view "(paragraph 58). The Constitutional Court does not intend to examine the consistency of tax policy with other policies of the State, as it would find itself on a thin ice of not always conclusive analyses, the results of which are to be assessed and drawn from them by political contention to a democratic legislator who must consider whether the tax arrangements are appropriate and necessary (paragraph 60).
52. Although the above-outlined restraint of the Constitutional Court does not mean the absolute exclusion of tax issues from the review powers of the Constitutional Court or the resignation of the Constitutional Court to review tax laws from the point of view of their constitutional conformity, it nevertheless reflects the maintenance of the necessary degree of restraint or judicial self-restraint in this review, precisely in order to preserve the principle of division of power.
Meritorious review of the proposal
53. The Constitutional Court considered the arguments put forward by the appellants, the parties and the intervener and, despite the above-mentioned restraint, concluded that the proposal was partly justified.
54. A major part of the appellants' argument is concentrated on the alleged interference of the contested legal regulation in the fundamental right to privacy pursuant to Article 10 (3) of the Charter, according to which everyone has the right to protection against unauthorised collection, disclosure or other abuse of personal data. In particular, the appellants consider that the contested legal provisions will not stand up to the legitimacy, necessity and rationality of the data collected on the basis of the implementation of the inspection report or proportionality of the interest in such collection compared to the protection of privacy.
55. The Constitutional Court has already expressed its views on the substance of the right to privacy in its broadest sense. For example, in the finding of sp. zn. Pl. ÚS 24 / 10 of 22.3.2011 (N 52 / 60 SbNU 625; 94 / 2011 Coll.), he stated that "the right to respect for private life includes a guarantee of self-determination in the sense of the fundamental decision of the individual himself. In other words, the right to privacy also guarantees the right of an individual to decide at his or her discretion whether, or to what extent, the facts and information of his or her personal privacy are to be made available to other bodies. This is an aspect of the right to privacy in the form of a right to information self-determination, expressly guaranteed by Article 10 (3) of the Charter" (point 29).
56. However, the right to information self-determination does not constitute an absolute, unconditional guarantee of the prohibition on public authority to collect, publish or otherwise use private data. The Constitutional Court has previously defined the conditions for breaking this right. "Intervention into an individual's fundamental right to privacy in the form of a right to information self-determination within the meaning of Article 10 (3)... The Charter is thus only possible through an imperative legal regulation which must, above all, meet the requirements arising from the principle of the rule of law and which meets the requirements of the proportionality test, where, in cases of conflicts of fundamental rights or freedoms of public interest, or other fundamental rights or freedoms, the purpose (objective) of such intervention must be assessed in relation to the resources used, and the criterion for such assessment is the principle of proportionality... Such legislation must be precise and clear in its wording and sufficiently predictable to provide the potentially affected individuals with sufficient information on the circumstances and conditions under which the public authority is entitled to intervene in their privacy so that they can, where appropriate, adjust their behaviour so as not to conflict with the restrictive standard. The powers conferred on the competent authorities, the manner and rules for their implementation must also be strictly defined in order to protect individuals against arbitrary interference. The assessment of the admissibility of the intervention in view of the principle of proportionality (in the wider sense) then includes three criteria. The first is an assessment of the eligibility of the purpose (or suitability), whether a specific measure is capable of achieving the intended objective of protecting another fundamental right or public good at all. It is also a question of assessing the necessity in which it is examined whether the most respectful means of basic law has been used in the selection of funds. Finally, proportionality (in the narrower sense) is examined, i.e. whether the damage to the fundamental right is disproportionate in relation to the intended objective, i.e. that measures limiting fundamental human rights and freedoms must not, if there is a conflict of fundamental right or freedom with a public interest, exceed, by its negative consequences, the positive effects which constitute a public interest in those measures' (point 37 of the above-mentioned decision, page 24 / 10).
57. The Constitutional Court first examined whether the Institute of Audit Reports as such would stand in the proportionality test. If this were not the case, it would not be relevant to address the various provisions of the contested law. As shown below, the control report has stood in all three steps of the test.
58. The first step of the proportionality test is to assess the eligibility of the purpose of the contested legal regulation, namely whether the control report is able to achieve the intended objective of protecting the public interest in the proper collection of taxes as an important precondition for the proper functioning of the State and society (see paragraph 50 above).
59. According to the explanatory memorandum to Act No. 360 / 2014 Coll., amending Act No. 235 / 2004 Coll., on Value Added Tax, as amended, and other related laws (see House Press 291 / 0), the control report constitutes a set of requirements for the registration of tax-related data, in order to improve tax collection, limit VAT fraud, and thus strengthen the position of honest tax entities. The nature of the control report is then characterised by the explanatory report (and, in line with it, by the Government's statement on the proposal for the repeal of the control report regulation), that the aim and purpose of this measure is to enable the tax administrator to obtain information on the selected transactions carried out by the payer and, in conjunction with other data available to the tax administrator, to identify the risk links (chains, carusels) draining illegally from public budgets in the form of excessive deductions paid. A significant factor should be the timeliness of finding data where the tax administrator compares the data obtained and joins each other in the form of "pairing 'individual control reports, so that, at the time of the control report, it has data that allows it to carry out a timely analysis and identify possible risk links between payers who are illegally reducing the tax and claiming deduction, but which another article of the chain has not been carried out. The immediate identification of organised connections allows the tax administrator to block the unauthorised recovery or blocking of funds in bank accounts, through the Institute of Security under Section 103 of the Value Added Tax Act. At the time of filing the tax returns, according to the Government, as the promoter of the law, the tax administrator has data which would otherwise be obtained mainly by subsequent control activities for individual payers. At the time of carrying out such a control activity, however, some articles of the concentration are no longer incoherent and the funds are withdrawn from the tax administrator's disposal. To that end, the contested provision of Paragraph 101d (1) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., states that in the inspection report, the payer is required to provide the prescribed information necessary for the administration of the tax.
60. Under the provisions of § 1 (2) and (3) of Act No. 280 / 2009 Coll., the Tax Code, the tax administration is a procedure aimed at the correct identification and determination of taxes and the security of their remuneration. The tax return, report or bill, as well as the additional tax return, subsequent reporting or additional accounting submitted by the tax entity, shall be the basis for this correct determination and determination. Thus, the Institute of Control Reporting can be considered as one of the types of tax claims that differ from other tax claims relating to VAT by certain specificities. These are mainly the periodicity of the reports (cf. § 101e of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll.) and the scope of the required data (cf. Paragraph 101d (1) of the Value Added Tax Act), depending on its specific determination (see further below). In this respect, therefore, the Institute of Audit Reports is not in any way out of line with other tax institutions (tax claims), and it can therefore be concluded that the audit reports are generally capable of fulfilling the legislative purpose pursued by the legislator. The Constitutional Court therefore considers that the legitimate objective or general interest pursued by the contested rules is demonstrated here. However, in view of the limits outlined above on the control of the standards of the tax law sector, it is no longer for the Constitutional Court to assess whether the control report is an optimal means of achieving the declared objective. As has already been mentioned, the legislator has a relatively wide margin of discretion in this respect in order to implement its economic and social policy.
61. With regard to the assessment of the second step of the proportionality test, it should be noted at this point that the examination of whether, in the selection of the possible means, the most prudent means for basic law, i.e. the de facto most prudent way of achieving the intended (legitimate) objective, is hardly feasible in the light of the nature of tax law. The management of taxes and charges is characterised by a considerable degree of dynamism of its processes, influenced by a number of factors which have their origin in their own interaction between tax entities in the broadest sense of the word, which over time may take different forms in qualitative and quantitative terms. The tax administration must be able to respond adequately to these changes if it is to fulfil its mission.
62. The fact that VAT payers are in this context burdened by the obligation to include personal data in the control report does not mean, without further ado, that it is an unconstitutional invasive interference in the right of the individual to protect against unauthorised collection, disclosure or other abuse of personal data, as it means Article 10 (3) of the Charter. It is hard to imagine an effective tax administrator tool that would not collect any data on transactions of tax entities which are, by definition, more or less linked to the collection of certain personal data. The key issue here is the extent to which tax entities are obliged to provide personal data, the nature of such data, as well as the guarantees against their misuse. This is directly related to the appellant's challenged online availability of data on a national scale.
63. The appellants consider the present system of checks of individual tax entities to be sufficient to achieve the above objectives. They point to the risk of online availability of interconnected database. This concern is understandable but not sufficient to conclude that the whole of the contested legislation is unconstitutional. If technical means used for business are developed, the tax administration must also monitor these developments. At a time when a number of transactions and transfers of money are actually online, i.e. in the order of seconds, it is difficult to insist that the State does not have the right to follow this trend, but to remain on random checks. These cannot in particular ensure the timeliness of finding information and taking the necessary measures from the tax administrator - see paragraph 59 above. The appellants do not submit any other instrument that would be more efficient and yet could effectively lead to the above-mentioned legitimate objective. It is not the task of the Constitutional Court to invent such an instrument. In the opinion of the Constitutional Court, the control report will thus also stand in the second step of the proportionality test.
64. In assessing the third step of the test, the Constitutional Court assessed proportionality in the narrower sense, i.e. whether the damage to fundamental rights caused by the collection of personal data is disproportionate in relation to the intended objective. That is, whether, in this regard, the control report does not, by its potentially negative consequences, exceed the public interest contribution to avoiding or minimising the tax fraud mentioned above.
65. At this stage, the Constitutional Court does not yet address the appellants' contention of the law when imposing obligations under § 101d (1) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll. As has already been said, the Constitutional Court assesses the regulation of the control report first as a whole. According to the provisions of § 9 (3) of Act No. 280 / 2009 Coll., the Tax Code, the tax administrator may collect personal data and other data if necessary for tax administration only to the extent necessary to achieve the objective of tax administration. This right of the tax administrator to collect personal and other data on tax entities is reflected in the provisions of § 11 (1) (b) and (c) of Act No. 280 / 2009 Coll., the tax rules whereby the tax administrator is given the power to carry out the search activities and to check compliance with the obligations of persons involved in tax administration; at the same time it is entitled, for the purposes of tax administration, to establish and maintain registers and registers of tax entities and their tax obligations (§ 11 (2) of the same Act No. 280 / 2009 Coll., Tax Code), which implicitly implies the collection of data on tax entities.
66. The control report shall not, in view of the generally defined extent of the data collected, be excluded from other tax institutes, where personal data are also collected. Since the Value Added Tax Act does not specify the required data, the Constitutional Court based the data required by the Ministry of Finance form at the time of the decision to complete the proportionality test. It can be seen from the publicly available model control report form on the website www.finannisprava.cz, as well as from the instructions for filling it, that at that time the basic identification data of the payer (name and registered office of the legal person, or name, surname, date of birth and place of residence, if applicable, if applicable) are required, the basic data relating to the individual taxable transactions carried out, i.e. the date of implementation, or the date of the obligation to grant VAT, the registration number of the tax document, the general nature of the subject and its value. In addition, the tax administrator shall require the basic identification details of the customer or supplier, which are either a tax identification number or, in the case of an entity without a tax identification number, the name and surname or business name of the entity, the date of birth and the place of residence, respectively, in the case of natural persons. It is clear from that list that it is not now data that the tax administrator could not obtain its own search or control activities or data that would be prima vista beyond the data necessary to achieve the tax management objective.
67. This also applies to a number of other tax claims, such as tax returns. The data obtained in the context of the control report shall then be no different from that which the payer is required to keep in the context of the value added tax register. However, the tax administrator may, without doubt, establish its own control activities, whether through tax control, local investigations or similar institutes, for which the extent of the information required by the tax authorities is also not specified. This is also the case with the appellant of the intervention in the protection of the clients of lawyers who are VAT payers. Here too, the tax administrator may obtain information on the amount, frequency or frequency of payments made between the lawyer and his clients. Thus, the interference with the right to privacy cannot at present be considered disproportionate in relation to the public interest declared above to prevent or minimise the abovementioned tax fraud. In general, the legal regulation thus stood before the Constitutional Court in the third step of the proportionality test.
68. Although the proportionality test was favourable to the overall adjustment of control reports, this does not mean that all the provisions were found by the Constitutional Court to be consistent with the constitutional order.
69. In relation to the provisions of § 101d (1) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., the appellants objected to a breach of the principle of the reservation of the law on the imposition of obligations. The appellant's principle of reservation of the law is that "no one must be forced to do what the law does not impose 'and that" obligations may be imposed only on the basis of the law and within its limits' (Article 2 (4) of the Constitution, Article 2 (3), Article 4 (1) of the Charter). The contested provision obliges the payer to indicate in the control report "the prescribed data required for tax administration '. The Act" prescribed data "does not specify any further and, by virtue of the provisions of § 72 paragraphs 1 and 2 of Act No. 280 / 2009 Coll., the Tax Code, as amended by Act No. 458 / 2011 Coll., leaves the Ministry of Finance to specify these data in the electronic form of the control report. In addition, the Government states that the tax administrator can only require the data needed for tax administration, which could be required by the tax administrator to report to each payer separately without any specific obligation. That is true, but then the tax administrator would have requested them in an address and in an incomparably smaller extent - specific data, after a particular payer. On the other hand, the check report must be submitted to the payer without notice and must contain the data according to the current form of the form. This form thus takes the form of a substatutory regulation imposing specific obligations on an indefinite number of addressees. And since duties are defined in the law very precarious and widely, their specificity is at the Ministry of Finance. It can be agreed with the appellants that the executive power is so entrusted to power, which according to the Constitution belongs only to legislative power. The need for a legal definition in this case is all the more urgent that the payers must provide data regularly and electronically. In one place and at virtually one moment so the state collects an enormous amount of information. This is what makes all this information much more sensitive and much more valuable.
70. The Constitutional Court therefore concludes that the law must specify at least the range of data that the payer must communicate. This does not preclude any legal authorisation (Article 79 (3) of the Constitution) to determine specific individual data by the Ministry of Finance. However, this would have to happen in the form of legislation. This is the only way to ensure the predictability of the data that the State will require from the payer. There is certainly no possibility of a possible abstract check of constitutionality by the Constitutional Court, which is excluded in the case of a mere form. In view of the infringement of the provisions of Articles 2 (4), 79 (3) of the Constitution and Article 2 (3) and Article 4 (1) of the Charter of the Constitutional Court pursuant to the provisions of § 70 (1) of Act No 182 / 1993 Coll., on the Constitutional Court, as amended by Act No 48 / 2002 Coll., the said provision of § 101d (1) of Act No 235 / 2004 Coll., on Value Added Tax, as amended by Act No 360 / 2014 Coll.
71. The effects of the annulment of the latter provision were set by the Constitutional Court up to 31.12.2017 (Paragraph 70 (1) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll.), for the following reasons. An immediate repeal of this provision would make no sense to the whole control report legislation. In the view of the Constitutional Court, the reason for the repeal of the provision in question is rather the concern of its possible future abuse. As mentioned above, the data currently required can be considered necessary to achieve the tax management objective (paragraph 66 above).
72. The Constitutional Court found a contradiction with the constitutional order also with the provisions of § 101g (5) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., namely the contradiction with Articles 2 (3) and 4 of the Charter. That provision of the Act provides that "a call which is delivered via a public data network to an electronic address shall be deemed to have been received at the time of dispatch by the tax administrator '. Paragraph 101g of the Value Added Tax Act allows delivery to the electronic address and delivery to the data box. However, business individuals have only the possibility and not the obligation to have a data box (Section 4 of Act No. 300 / 2008 Coll., on electronic acts and authorized conversion of documents, as amended). In the event that the payer does not have a data box available and has not yet communicated its electronic address to the tax authority, the general delivery arrangements provided for in § 42 to 51 of the Tax Code shall apply. For all these delivery methods it is necessary for delivery (or its fiction) that the invitation reaches at least the domain of the payee's disposition. According to the provisions of § 17 (2) and (3) of the Electronic Act and the authorised conversion of documents, the document is delivered at the time of the entry of the authorised person into the data box or on the tenth day after delivery to the data box. When delivering to natural persons pursuant to the provisions of § 44 of the Tax Code, the document is served either at the time of taking over or the end of the 10-day storage period (§ 47 of Act No. 280 / 2009 Coll., Tax Code).
73. According to the contested legislation, however, the dispatch of the call will be sufficient to create a fiction of delivery. As the public data network cannot be considered to be entirely reliable, the invitation to the payer may not reach or reach it at any time. A payer who does not have a data box and has communicated his e-mail address to the tax administrator is potentially in a situation where he is obliged to do so without his own fault. Such a duty is not realistic. The Constitutional Court therefore annulled the provisions of § 101g (5) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., with effect from the date of the declaration of the finding in the Collection of Laws (§ 70 (1) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll.).
74. The appellants' objection regarding the protection of the tax administrator of the collected personal and other data was not left out. In the tax rules, the whole of Title Four of Part Two is devoted to the issue of the protection and provision of information, the provision of which Article 52 (1) provides that official persons and persons involved in the administration of taxes are bound by the obligation of confidentiality as to what they have learned about the circumstances of other persons when managing taxes. The law deals extensively with issues relating not only to the obligation of secrecy, but also to the information obligation of the tax administrator and the obligation of other public authorities and public and private law bodies to provide data to the tax administrator. Similar legislation included the predecessor of the Tax Code - Act of the Czech National Council No. 337 / 1992 Coll., on the Administration of Taxes and Fees, in § 24. It is also worth noting in this respect some interesting context in the legislation in force, in particular the provisions of Section 10 of Act No. 106 / 1999 Coll., on free access to information, entitled "Protection of the confidentiality of property ratios," according to which "information on property ratios of a person who is not a compulsory entity, obtained under the laws on taxes, taxes, pension or health insurance or social security, is not provided by the compulsory body under this law, i.e. a certain level of data protection obtained by means of control reports is also ensured here. A fine of up to CZK 500 000 (§ 246 of Act No. 280 / 2009 Coll., Tax Code; as well as § 25 of the previously applicable Act No. 337 / 1992 Coll., on the Administration of Taxes and Fees, as amended) may be imposed (cf. Resolution sp. zn. IV of the ÚS 369 / 01 of 21.2.2002; Available at http: / / nalus.ujud.cz). Finally, the criminal dimension of protection by the tax controller of the collected data cannot be overlooked. Paragraph 180 of the Penal Code provides for the offence of unauthorised handling of personal data and provides for appropriate penalties.
75. The appellants state that the obligation of confidentiality of individual FIU personnel is not a guarantee that the data collected will not fall into the hands of unauthorised persons and that the risk of illegal misuse of stored data should be assumed. However, this could be argued in relation to virtually all data collected. for example, much more sensitive health data. The absolute guarantee can never be provided, even by a more sophisticated legal instrument. The risks of potential misuse of data are inherent in human behaviour as such. However, "automatically" cannot be assumed as "default setting" of the individual's behavior, rather as an exception, the excesses of it. The legislature has generally calculated the possibility of misuse of data by financial management personnel, adjusted the basis for handling the information obtained in the context of the administration of taxes and charges, and has also imposed penalties for any breach of these principles. Moreover, the injured entity shall not be deprived of its right to claim compensation against the person who caused it by violating those principles. Thus, the Constitutional Court does not share the appellants' appeal for a preventive waiver from the collection of personal data in order to eliminate any risks associated with it, as this would de facto undermine the nature of the administration, in this case the functioning of the tax administration.
76. Furthermore, the appellants believe that the contested legal provisions will not stand up to the proportionality test, nor as regards their impact on the various actors in their material sphere. They claim that they impose obligations on each payer regardless of its size and therefore burden the same large and small entrepreneurs. Nor did the Constitutional Court find this objection appropriate. Indeed, the control report affects all obliged entities without differentiation of their size. However, the inequality that the appellants have in mind is not due to the legislative 'control report setting', but rather to the scope of the VAT payers' activities, which is, by definition, different for each of them. However, this is generally also in line with the staffing and technical provision of their activities, which will differ for each of them. The payer has an obligation to record all data relating to its tax obligations, that is to say, the data required to produce tax claims (with reference to the provisions of Section 100 of the Value Added Tax Act), which is proportionate to the activities of an individual entrepreneur. Thus, the "large 'entrepreneur effectively records data to a greater extent than the" medium' or "small 'entrepreneur. The Constitutional Court considers that even at this point the contested provisions of the Value Added Tax Act will stand up to constitutional conformity.
77. As regards the appellant of the non-constitutional penalty deficit raised in connection with the breach of the obligations relating to the control report, it is first of all necessary to draw attention to the legislation adopted in the meantime with effect from 29 July 2016. The new provisions of Sections 101j and 101k of the Value Added Tax Act were inserted into the Act by the already mentioned Act No. 243 / 2016 Coll. The first of these provides that the obligation to pay the fine for the additional submission of the control report without calling on the tax administrator does not arise unless there has been a different delay in the payment of the check report for the payer in the calendar year in question. The second provision allows the tax administrator to waive the fine in whole or in part if the failure to submit a control report is due to a reason that can be justified in the light of the circumstances of the case, without being bound by the payer's proposal. From here it is clear that the main reasons for which the appellants consider the provisions of § 101h of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., as unconstitutional, i.e. fixed sanctions without the possibility of their remission or modification and the associated impossibility of an administrative authority individually assessing and moderating the fine have been removed by this amendment. The only fines that are not subject to the exclusion and remission of the fine are now fines imposed by the tax administrator of up to CZK 50 000 to the payer, who, at the request of the tax administrator, will not change or complete incorrect or incomplete data even by means of a subsequent control report; and fines of up to 500 000 CZK imposed on the person who, by failing to fulfil his obligation to check the report, makes tax administration seriously difficult or hindering. However, it is apparent from the concept of such financial penalties that their imposition is preceded by other criminal conduct by the payer or by shortcomings in the performance of his duties. In addition, the provisions of Paragraph 101h (6) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., according to which when determining the amount of these fines, the tax administrator shall ensure that the fine is not in a gross proportion to the meaning of the violated obligation and to the seriousness of the consequences for tax administration; taking into account, in particular, the degree of cooperation of the payer. For these sanctions, the law therefore foresees the possibility of their moderation, considering all the circumstances of the alleged infringement by the taxpayer of its obligations. The Constitutional Court has therefore not reached a conclusion on the non-constitutionality of the sanction mechanism provided for by the provision of § 101h of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll.
78. In view of the repeal of the provisions of § 101d (1) of Act No. 235 / 2004 Coll., on Value Added Tax, as amended by Act No. 360 / 2014 Coll., the question (no) of the possibility of defence against the imposed fine in relation to the refusal to provide data on which the payer to submit a verification report considers that they go beyond the necessary framework for tax administration is not up to date. Nevertheless, the Constitutional Court addressed it and did not testify to the appellants' objections. In its observations on the proposal, the Government itself stated that the requirement to provide data in the control report could be denied. This refusal is then sanctioned by a fine of CZK 30 000 pursuant to § 101h (1) (c) of Act No. 235 / 2004 Coll., on value added tax, as amended by Act No. 360 / 2014 Coll. However, an appeal against this decision is admissible, even if it has no suspensive effect. Any negative decision by the appellant to impose a fine may be further contradicted by an action in the administrative justice system, as judicial review is not ruled out by law. The appellants reject this path in a reply because, in their view, they "act only ridiculously from the point of view of practice '. It may be accepted that a payer who decides to resist even the actual unauthorised requirement to provide data in the control report (and the use of the Institute for the remission of the fine is not taken into account, or does not lead to rectification) will normally be forced to pay the fine first (unless the Appellate Body is sufficient to amend or revoke the decision of the administrative authority of the first degree within the period to be paid, i.e. within 15 days - § 101h (5) of Act No. 235 / 2004 Coll., on the value added tax, as amended by Act No. 360 / 2014 Coll.) and then proceed as indicated above. On the other hand, it is impossible to ignore the fact that a fine of CZK 30,000 is not a huge burden for the payer to submit a check report. The VAT payer will only become a taxable person with his head office in the Czech Republic if his turnover for a maximum of 12 immediately preceding consecutive calendar months exceeds CZK 1 000 000, with the exception of a person who only carries out transactions exempt from tax without the right to deduct tax (Section 6 (1) of the Value Added Tax Act). In the opinion of the Constitutional Court, therefore, it is generally not a body for which, in terms of its revenue and its ability to pay the fine at all, a" choking effect' could be expected in the context of the sanctions imposed in this way. This dimension must also be taken into account when assessing the constitutional conformity of the legislative provisions concerned.
79. Therefore, for all the reasons set out above, the Constitutional Court did not find that the contested legal provisions (with the exception of Articles 101d (1) and 101g (5)) could not be interpreted in a constitutional manner. Nor did it find any intervention in the appellant's alleged fundamental rights. According to the provisions of § 70 (2) of Act No. 182 / 1993 Coll., on the Constitutional Court, the Constitutional Court therefore rejected the application for annulment of the contested provisions of the Value Added Tax Act in the remainder. As regards the proposal for a preliminary ruling under Article 39 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., it did not comply with it because no relevant reasons were found for such action. Neither the appellants' assertion of the effects of the contested provisions of the Value Added Tax Act, nor the alleged increasing risk of misuse of data collected by means of a control report, as discussed above, can be regarded as such.
President of the Constitutional Court:
JUDr. Rychetský v. r.
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Regulation Information
| Citation | The Constitutional Court found no 40 / 2017 Coll., on the application for annulment of certain provisions of Act No. 235 / 2004 Coll., on Value Added Tax, as amended |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 15.02.2017 |
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| Effective from | - |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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