13 July 2026

Statute of limitations for tax liabilities – ARPI guide

The Tax Ordinance governs the statute of limitations for tax liabilities. Simply put, the statute of limitations for a tax liability is the expiration of the period within which a taxpayer must settle a specific tax liability. This means that for a certain period from the moment the tax liability arises, the taxpayer is obligated to settle the tax liability with the tax office, and tax authorities can verify and audit whether the taxpayer has fulfilled this obligation. Therefore, after a specified period, both the taxpayer is released from the obligation to settle the tax and the tax authority cannot claim the right to enforce it (provided that the tax authority has not taken any action to this end before the statute of limitations expires – e.g., a tax audit or tax proceedings).

How does a tax liability arise?

Article 21, paragraph 1 of the Tax Ordinance discusses how a tax liability arises. A tax liability can arise in two ways:

• By operation of law (declaratory nature), a tax liability arises as a result of an event that the tax law associates with the creation of a tax liability. This means that the tax authority is not involved in the creation of a tax liability. An example would be the creation of a VAT tax liability – it can arise from the paid delivery of goods or the provision of services.
• By decision (constitutive nature) – a tax liability arises upon delivery of a tax authority’s decision, in which the tax authority determines the amount of the tax liability. In such a situation, the decision is constitutive in nature – it creates a tax liability. An example would be a property tax decision issued to an individual.

Expiration and Statute of Limitations of Tax Liability

Tax law distinguishes between effective and ineffective forms of tax liability extinction. Effective forms are those in which the tax office satisfies the tax liability. Forms of effective tax liability extinction include: payment of tax, offsetting, offsetting an overpayment or offsetting a tax refund, and taking ownership of real estate or property rights in enforcement proceedings.

Ineffective forms of action are those in which the tax authority’s needs are not satisfied. Ineffective forms include: statute of limitations, failure to collect, and write-off of arrears.

Tax Liability Statute of Limitations

The statute of limitations on a tax liability is therefore one of the ineffective forms of its expiration. In such a situation, the tax authority not only fails to satisfy its fiscal needs but also loses the right to enforce them.

Depending on the form in which the tax liability arises (whether by operation of law or by decision), the statute of limitations on the liability differs.

In the case of a tax liability arising by operation of law, the tax liability expires after 5 years from the end of the calendar year in which the payment deadline expired.

For example, for the 2020 corporate income tax (CIT) tax return, the annual return is due by the end of March 2021. The 5-year limitation period runs from the end of 2021, meaning the tax liability expires at the end of 2026. Unlike income tax, there is no annual tax return for VAT returns; the 5-year limitation period runs from the end of the year in which the deadline for filing the return and paying the tax was.

For the January 2020 tax return, the deadline for filing the return and paying the VAT due is February 25th. The 5-year limitation period runs from the end of 2020, meaning the VAT liability expires at the end of 2025.

The situation is different for tax liabilities arising from decisions. This refers, of course, to the “limitation period for the right to issue a tax decision”—that is, the decision determining the amount of the tax liability. According to the Tax Ordinance, the right to issue a tax decision expires after three years from the end of the calendar year in which the tax liability arose. In such a situation, if the decision is not delivered within the specified deadline, the tax liability will not arise. The legislator has provided certain exceptions to this rule – the deadline for issuing a tax decision will be extended to five years – in situations where the taxpayer:

• Failed to file a tax return within the statutory deadline,
• Failed to disclose all the information necessary to determine the amount of the tax liability in the filed return.

Suspension of the limitation period

Suspension of the limitation period means that the limitation period (3 or 5 years) is suspended until the reason for its suspension ceases, which, according to the regulations, causes its suspension (e.g., for the duration of criminal proceedings).

Under the provisions of Article 70, paragraphs 2 and 6 of the Tax Ordinance, the deadline is suspended in the following circumstances:

1. Issuance of a decision deferring the payment of tax or tax arrears, or issuance of a decision to pay tax or tax arrears in installments.
2. Issuance (entry into force) of a regulation of the Minister of Finance extending the tax payment deadline.
3. Initiation of criminal and fiscal proceedings for a fiscal offense or fiscal misdemeanor (if the offense or misdemeanor involves failure to settle a tax liability).
4. An appeal against a decision regarding a tax liability to an administrative court.
5. Application (demand) for the determination of a legal relationship or right to a common court.
6. Service of a decision accepting security or an order for security (pursuant to the provisions on administrative enforcement proceedings).
7. Service of a notification of accession to security (in cases specified in administrative enforcement proceedings).
8. The Head of the National Tax Administration (KAS) submits a request to the Council for Tax Avoidance at the request of the party (taxpayer) in an appeal against a decision issued in a tax avoidance case.

From the date the reason for suspending the limitation period ceases or ends, the limitation period will continue to run.

Interruption of the limitation period

In addition to suspending the limitation period for a tax liability, there are also two situations in which the limitation period is interrupted (i.e., situations in which the period will be counted from zero).

Pursuant to Article 70, paragraphs 3-4 of the Tax Ordinance, the limitation period is interrupted when:

• The taxpayer’s bankruptcy is declared. The limitation period is reset and starts anew from the date the decision terminating or discontinuing bankruptcy proceedings becomes final.
• An enforcement measure, of which the taxpayer was notified, is applied. The limitation period is reset and starts running from the day following the date on which the enforcement measure was applied.

This means that in a situation where the taxpayer has filed for bankruptcy, or the enforcement authority (tax office) applies one of the possible enforcement measures against the taxpayer, the limitation period will be reset.