Do not neglect your financial statements: avoid the unnecessary risk of substantial sanctions; fines may amount to millions

The deadline for reviewing financial statements and their subsequent publication in the Collection of Deeds is approaching for most companies. Even though this is a recurring annual task, many companies tend to neglect or postpone it. However, keep in mind that failing to comply with this obligation may have serious consequences, such as fines imposed by the Tax Office and the Registry Court and other negative impacts on business activities.

Every business corporation entered in the Commercial Register (including inactive ones and those with no profit) must:

• Review their financial statements at the general meeting no later than 6 months from the end of the fiscal year. Therefore, if your fiscal year ended on 31 December 2024, you have until 30 June 2025 to review your financial statements.
• Deposit the documents, including the financial statements and the annual report (if prepared), in the Collection of Deeds no later than 12 months from the balance sheet date.

What are the penalties for failing to publish financial statements?

Fines imposed by the Tax Office:

Pursuant to the Accounting Act, the Tax Office may impose a fine of up to 3% of the value of the company’s assets. In practice, the penalties typically amount to several thousand Czech crowns, although the law permits fines of up to tens of millions.

Fines imposed by the Registry Court:

In the event of failure to publish financial statements, even after being requested to do so, the Registry Court may impose a fine of up to CZK 100,000. In the event of a repeated violation, the court may initiate proceedings to dissolve the company with liquidation.

Other risks:

Failure to publish financial statements may prompt the authorities to initiate a tax audit. The Tax Office may inquire about the reasons for non-compliance and, if any irregularities are found, assess an additional tax or impose further penalties.

The failure to publish financial statements can also negatively impact the company’s reputation with business partners, banks and authorities. The public disclosure of financial information is often perceived as a sign of transparency and good financial health.

Moreover, the non-disclosure of financial statements may be considered a breach of due care and may have personal consequences for the members of the governing bodies.

If your fiscal year ended at the end of 2024 and you have not yet reviewed your financial statements at the general meeting, we recommend reviewing and approving them as soon as possible without undue delay, including any proposals for profit distribution or loss settlement. Does your company have a sole owner? In this case, there is no general meeting. It is sufficient for the sole owner to issue a resolution approving the financial statements. Afterwards, don’t forget to enter the statements in the Collection of Deeds.

If you have any questions regarding the correct procedure, the necessary formalities or any other matter, please do not hesitate to contact us. We will be happy to help you.