Opinion of 22 February 2023, Case No Tpjn 300/2022 –⁠⁠⁠⁠⁠⁠ Compensation bonus as tax fraud during the Covid-19 pandemic

Opinion of the Criminal Division of the Supreme Court of 22 February 2023, Case No Tpjn 300/2022

(Tax fraud, criminal law, compensation bonus, Covid-19 pandemic)

The Criminal Division of the Supreme Court of the Czech Republic addressed the legal classification of conduct involving the fraudulent acquisition of a compensation bonus paid under emergency laws enacted in 2020 and 2021 in response to the COVID-19 pandemic. The impetus for the Opinion came from the Prosecutor General, who pointed out inconsistent judicial practice, as in specific cases lower courts classified such conduct in different ways – as fraud according to Section 209 of the Criminal Code (“CC”), tax evasion according to Section 240 CC, or as subsidy fraud according to Section 212 CC.

The Criminal Dicison of the Supreme Court thoroughly examined the nature of the compensation bonus. It pointed out that the law governing this specific instrument explicitly defined it as a tax refund and stipulated that it is administered under the Code of Tax Procedure. The compensation bonus is recorded in the taxpayer’s personal tax account, its payment proceeds similarly to other tax refunds, and in cases of incorrect assessment, the tax is reassessed. Moreover, the administration of the compensation bonus was entrusted to tax offices, as a part of tax administration. Based on these formal, functional, as well as procedural aspects, the Supreme Court concluded that the compensation bonus must be considered a tax for criminal law purposes.

Consequently, fraudulent acquisition of the compensation bonus, subject to additional conditions – particularly damage of at least 100 000 CZK (approximately 4 000 EUR) – constitutes the criminal offense of tax evasion under Section 240 CC. It would not matter whether the perpetrator impersonated another taxpayer or, as the actual (real) subject, falsely claimed entitlement to the compensation bonus. The decisive factor is the intentional provision of false information leading to a reduction in public revenue. The Criminal Division of the Supreme Court emphasized that the perpetrator of this offense may be not only the taxpayer but also any other person who fraudulently claims the compensation bonus.

In this way, the Criminal Division of the Supreme Court rejected alternative legal classifications of such fraudulent activities – the compensation bonus was not considered a subsidy, grant, or repayable financial assistance, and therefore the respective conduct could not be classified in different way. In cases where the fraudulently obtained amount did not reach the threshold of significant damage (i.e. 100 000 CZK, mentioned above), the conduct would not be classified as a criminal offense. In such cases, it could be assessed as an administrative offense.

This Opinion provides important clarification and unification of the legal classification of conduct related to the unauthorized acquisition of compensation bonus and offers clear guidance for future judicial and prosecutorial practice.