Tag: Low rental fees

Czech Republic vs. Corp. January 2011, Supreme Court 7 Afs74-2010-81

A lessor rented real estate for a low price to related parties.  The tax authorities claimed that the price was too low and required additional income to be taxed with the lessor. The lessor explained that the low rental fees were due to the poor condition of the real estate that was leased to related parties. The tax authorities rejected this explanation and concluded that the taxpayer had not proven the real condition of the real estate in the examined period. The legal question was the allocation of burden of proof between the tax payer and the tax authorities is specific phase of the tax inspection. The court ruled that: the tax authorities bore the burden of proof in this case and had to prove all significant parameters of the controlled transaction. The tax authorities must establish the arm’s length price (called the “reference price” in the decision) in order to be able to require that the taxpayer explain the ... Continue to full case