ECJ - Recent Developments in Direct Taxation 2012

S. 21The Czech Republic: Preliminary ruling referred by the Czech Supreme Administrative Court – Sabou (C-276/12)

S. 221. Introduction

For the first time in the history of direct taxes the Czech Supreme Administrative Court is referring a question to the ECJ.

2. Facts of the case

This case represents a classic tax planning case where the taxpayer has tried to “artificially” influence the tax base. In the taxable period 2004 Mr Sabou was a professional footballer. Originally, the tax authority assessed personal income tax in the amount of CZK 29,700. Later, based on the results of a tax audit, the taxpayer received a new, higher tax assessment. When the taxpayer appealed to the second level tax authority he received an even higher tax assessment than at the first level, this time in an amount of CZK 283,604 CZK. The City Court in Prague dismissed the suit of the taxpayer on 27 July 2011. On 15 November 2011 the taxpayer submitted a cassation complaint to the Supreme Administrative Court (hereinafter “SAC”). During the legal proceedings the SAC discovered that part of the questions in the case touch EU law – Council Directive 77/799/EEC.

Mr Sabou was asked in 2007 by the tax authority within the fr...