Tax Office Audit: How to Prepare

Receiving a notice of a tax audit from the tax office is enough to make even an experienced business owner's heart race. Yet a tax audit is a completely standard part of the tax process, and if you keep your records diligently, there's nothing to fear. The key is knowing how the audit works, what your rights and obligations are, and what to prepare. This guide will walk you through the entire tax audit process step by step — from the first notice to the final report.

What triggers a tax audit

The tax office doesn't send auditors at random (although it can). A number of factors increase the likelihood that an audit will be directed at you specifically.

The most common audit triggers

1. Discrepancies in your tax return

If your return contains unusual figures, significant swings in income between years, or suspicious deductions, the tax administration's system flags it as a risk signal. For example:

• A sudden 50% drop in income with no apparent reason
• Unusually high expenses relative to income
• Repeatedly reporting a tax loss

2. Control statements and cross-checks

The tax administration automatically compares data from your return with data from your business partners, banks, and other institutions. If the figures don't match — for example, a supplier reports income received from you but you haven't listed it as an expense — this can trigger an audit.

3. Third-party tips

An audit can also be triggered by a tip from a third party — typically a disgruntled business partner, a competitor, or a former employee.

4. Sector-wide audits

The tax administration regularly conducts targeted audits in specific industries. Historically, these have focused on areas such as hospitality, construction, car repair shops, e-commerce, and cash-based services.

5. Random selection

Some audits are carried out on the basis of random selection, to ensure audit coverage across all types of taxpayers.

How you'll find out about an audit

A tax audit is initiated by the delivery of a notice of commencement of tax audit. In practice, this can happen in several ways:

Ways an audit can be initiated

• Registered letter to your data mailbox — the most common method
• Phone call — the tax authority may call you first to arrange a date
• In-person visit — less common, but the tax authority has the right to commence an audit without prior notice

What the notice contains

A tax audit notice must include:

1. Which tax the authority will be auditing (income tax, VAT, etc.)
2. Which tax period the audit covers (e.g. 2023, 2024)
3. Which documents you need to prepare and submit
4. The deadline by which you must submit documents or appear in person

How a tax audit works, step by step

Where the audit takes place

The audit most commonly takes place:

• At the tax office — you bring your documents to the office and the auditor reviews them there
• At your premises or office — the auditor comes to you, if that is more practical (e.g. for a stock inventory check)
• At your accountant's or tax advisor's office — if you have a representative, the audit may take place there

How long an audit takes

The law does not set a maximum duration for a tax audit. In practice:

| Type of audit | Typical duration | |--------------|-------------------| | Simple audit (1 tax, 1 year) | 2–6 months | | Comprehensive audit (multiple taxes, multiple years) | 6–18 months | | Complex cases (international transactions, VAT fraud) | Up to 2–3 years |

For a typical self-employed person with clear records, an audit usually takes 3–6 months from commencement to closure.

Your rights during an audit

The Tax Code grants you, as the subject of an audit, a number of important rights. Knowing them and actively exercising them is crucial.

The right to representation

You have the right to be represented by a tax advisor, a lawyer, or another person under a power of attorney. Your representative acts on your behalf, and the tax authority must direct all communication to them.

The right to a reasonable deadline

The tax authority must give you a reasonable amount of time to prepare and submit your documents. If the deadline set is too short, you have the right to request an extension — but you must do so before the deadline expires.

The right to inspect the file

You have the right to inspect the tax file and make extracts and copies from it (§ 66 of the Tax Code). This is especially important if you want to find out what information the tax authority is basing its conclusions on.

The right to respond to findings

Before closing the audit, the tax authority must inform you of the audit findings and give you time to respond. This right is fundamental — you can submit new evidence, clarify facts, or point out procedural errors on the part of the tax authority.

The right to have the audit concluded within a reasonable time

If an audit drags on for an unreasonably long time without apparent justification, you have the right to file a complaint about the tax authority's inactivity with the supervisory body (the Appellate Financial Directorate).

The right to appeal

You can appeal against an additional tax assessment (a decision levying additional tax) within 30 days of receiving it. An appeal has a suspensory effect — you do not have to pay the additional tax while the appeal is pending.

Your obligations during an audit

Alongside your rights, you also have obligations you must fulfil:

The duty to cooperate

You are required to provide the tax authority with the necessary cooperation — submitting documents, providing explanations, and allowing access to your premises. Refusing to cooperate can result in a penalty of up to 50,000 CZK and the tax authority may assess tax based on its own estimates (§ 98 of the Tax Code), which is generally less favourable for the taxpayer.

The duty of truthfulness

All information you provide to the tax authority must be truthful and complete. Knowingly providing false information can have serious consequences.

The duty to produce documents

When requested by the tax authority, you must produce all documents and records relating to the period and tax being audited. You cannot refuse on the grounds that you don't have the documents — in that case, you need to explain why.

What documents to prepare

As soon as you receive an audit notice, start gathering your documents immediately. The better organised they are, the faster the audit will go.

The core set of documents

How to organise your documents

• Chronologically — sort documents by date from the start to the end of the period
• By type — separate income and expenditure documents
• Linked to your records — every document should correspond to an entry in your tax records
• Sequential numbering — invoices should have continuous numbering with no gaps

What happens after the audit

Outcome: Everything is in order

If the audit finds no irregularities, the tax authority closes it and draws up a clean tax audit report. No additional tax is levied and you have no further obligations.

Outcome: Irregularities found

If the audit uncovers discrepancies, the tax authority will:

1. Draw up a tax audit report describing the findings
2. Go through the report with you — you have the right to respond
3. Issue an additional tax assessment — a decision levying additional tax

What can be assessed

• Tax — the difference between the correctly calculated tax and the tax you declared
• Penalty — 20% of the additional tax (or 1% of any amount by which a loss was unlawfully reduced)
• Late payment interest — the Czech National Bank's repo rate + 8 percentage points (in H1 2026, this amounts to 11.50% p.a.) for the period from the original tax due date

How to appeal against the audit outcome

If you disagree with the result of the audit, you have the right to challenge it.

Appeal against the tax assessment

• Deadline: 30 days from the date the decision is delivered
• To whom: The appeal is filed with the tax office that issued the decision, but it is decided by the supervisory body — the Appellate Financial Directorate
• Form: In writing, stating your grounds and any new evidence
• Suspensory effect: An appeal has a suspensory effect by law — you do not have to pay the additional tax until the appeal has been decided

Further remedies

If your appeal is unsuccessful, you can:

• File a lawsuit with the administrative court — within 2 months of receiving the appeal decision
• File a cassation complaint with the Supreme Administrative Court — against the administrative court's decision

How to minimise the risk of an audit

While you can't entirely prevent an audit, you can significantly reduce the likelihood of one being directed at you.

Rules for keeping solid tax records

Things to be especially careful about

• Cash payments — income and expenses paid in cash are harder to prove. Always keep records.
• Personal expenses in the business — never claim personal expenses (clothing, holidays, everyday meals) as business expenses
• Vehicle used for business — if you use a car for personal purposes as well, you must exclude a proportionate share from your expenses
• Barter and non-monetary consideration — reciprocal services and payments in kind are also taxable income

Frequently asked questions (FAQ)

Can the tax office show up unannounced?

The law does allow the tax authority to commence an audit without prior notice, but in practice they will generally contact you in advance — by phone or in writing. The exception is situations where there is a risk of evidence being destroyed.

How far back can an audit go?

The basic limitation period is 3 years from the deadline for filing the return. In 2026, the tax office can therefore generally audit the years 2023–2025. However, the period can be extended (e.g. by commencing an audit or filing an amended return) up to a maximum of 10 years.

Can I keep running my business during an audit?

Yes, an audit does not restrict your business activities. You are only required to cooperate with the tax authority and produce the requested documents.

What if I don't have the documents — they were lost or destroyed in a fire?

If you lost your documents for reasons beyond your control (fire, flood, theft), inform the tax authority. They may then assess the tax based on estimates (§ 98 of the Tax Code). We recommend filing a police report and attempting to reconstruct the documents (bank statements can be obtained from your bank, invoice copies from your business partners).

What fine will I get for not cooperating?

For failing to cooperate, the tax authority can impose a compliance penalty of up to 50,000 CZK. On top of that, if the authority is unable to assess the tax through evidence due to your non-cooperation, it will assess it based on estimates — meaning an educated guess, which is generally less favourable for the taxpayer.

Can I prevent an audit from happening?

You cannot challenge the commencement of an audit as such — the tax authority has a statutory right to carry one out. However, you can challenge specific unlawful actions (e.g. an unreasonable deadline, scrutiny going beyond the audit's scope) by filing a complaint about inactivity or a formal objection.

Keep your documents in order with DokladBot

The best preparation for a tax audit is keeping your records up to date and well-organised throughout the year. DokladBot is here to help — just take a photo of each document and send it via WhatsApp. DokladBot automatically processes, categorises, and stores it. When an audit comes around, you'll have everything ready to go.

Start organising your documents today at dokladbot.cz — and the next audit won't catch you off guard.

Official sources and links

• Czech Financial Administration — general information on tax audits
• Act No. 280/2009 Coll., the Tax Code — § 85 through § 88 (tax audit)
• Act No. 280/2009 Coll., the Tax Code — § 148 (limitation period for tax assessment)

---

This article is intended as a general information guide and does not replace individual tax or legal advice. The information is accurate as of the date of publication (February 2026) and is based on currently applicable legislation. For help with a specific situation, please consult a qualified tax advisor or lawyer.