When is a managing director liable for a company’s tax arrears? The supreme administrative court clarifies the conditions

In its judgment of 16 January 2026, Ref. No. 5 Afs 167/2025-35, the Supreme Administrative Court addressed whether additional tax assessed against a company may be regarded as damage caused by its managing director and whether such damage may give rise to the managing director’s liability for the company’s tax arrears under Section 159(3) of the Czech Civil Code in conjunction with Section 171 of the Czech Tax Code.

Building on its previous case law, the Court confirmed that tax arrears do not, in themselves, constitute damage, irrespective of whether they arise from an original or an additional tax assessment. For personal liability to arise, the tax authorities must establish that the managing director’s conduct caused an actual reduction in the company’s assets which resulted in the company being unable to pay the outstanding tax liability. Moreover, a managing director’s criminal conviction for a tax offence does not, in itself, automatically give rise to such liability.

You can read the full article by Roman Soldát HERE.