In CZ compensation to be paid by the tax administrator for the VAT excessive deduction retained during tax inspections has gone through an evolution. Until 2015 it was not specified in the tax administration act. In 2014 Czech Supreme Administrative Court ruled in its decision Kordárna ( 7 Aps 3/2013 – 34) that the tax payer is entitled to the interest of a Czech national bank REPO rate (which in the past years has oscillated between 0,05 – 2%) increased for 14%. In 2015 tax legislation set this rate to REPO plus 1% and in 2017 this has been changed to REPO plus 2%.
In its recent ruling 1 Afs 445/2019 – 47, the Czech Supreme Administrative Court ruled that this rate does not correspond to the rate that a person, not being a credit institution, would have to pay. The legislation is therefore in breach of Article 183 of the VAT Directive in this part. Thus, rules set in the Kordárna judgment (REPO plus 14%) continue to apply.
We will see how the Czech tax administration will approach this ruling. In the past, they refused to conform to the Kordárna decision arguing that the SAC exceeds its powers in that it can only interpret and not create the legislation.
Relating to this topic are ECJ Slovak case C-120/15 Kovozber, where ECJ ruled that the entity inspected is entitled to the compensation during although legal, however long lasting tax inspection and recent Hungarian case C-13/18 Sole-Mizo, where ECJ ruled that the tax payer is entitled to the interest reflecting the rate for which he might borrow the money on the market if his VAT claim is retained by the tax authority.
http://www.nssoud.cz/files/SOUDNI_VYKON/2019/0445_1Afs_1900047S_20200716102544.pdf
Source Czech Supreme Administrative Court