In connection with the recent non-final judgement of the Regional Court in Ústí nad Labem, a large number of enquiries have arisen concerning the refund of overpayments on social security insurance premiums for the first half of 2007. This article will therefore address certain issues relating to this matter.
The possibility of refunding an overpayment on insurance premiums is regulated in Section 17 of Act No. 589/1992 Coll., on Social Security Insurance Premiums and Contribution to the State Employment Policy, as amended (hereinafter “the Act on Social Security Insurance Premiums”), in two cases:
a) ex officio; If the Czech Social Security Administration or the district social security administration itself determines that an overpayment on insurance premiums has occurred, it is obliged to refund the overpayment within one month from the day it discovered it. The period of one month is stipulated directly in the Act and cannot be extended in any way. However, any exceeding of this period is not sanctioned in any manner; or
b) upon application by the payer of social security insurance premiums; If the payer requests a refund of the overpayment, the Czech Social Security Administration or the relevant district social security administration is obliged to refund the overpayment within the time limit generally stipulated pursuant to Section 71 of Act No. 500/2004 Coll., the Administrative Procedure Code, as amended (hereinafter “the Administrative Procedure Code”), i.e. within 30 or 60 calendar days respectively. Upon exceeding this time limit, the relevant social security administration is obliged to pay a sanction - interest on the overpayment at the rate of 140% of the discount interest rate of the Czech National Bank applicable for the first day of the calendar quarter in which the time limit for refunding the overpayment expired in vain.
The overpayment on insurance premiums is refunded to the payer of insurance premiums or its legal successor within five years after the end of the calendar year in which the entitlement thereto arose, unless there is another due obligation towards the district social security administration (this is the time limit within which it is necessary to apply for the overpayment to prevent its expiry in vain). If such an obligation of the applicant existed, the overpayment on insurance premiums would first be used to settle it, and only any difference would then be refunded to the payer of insurance premiums.
With regard to the above-mentioned five-year time limit, it is necessary to mention the decision of the Supreme Administrative Court of the Czech Republic ref. no. 6 Ads 16/2009-81, according to which the payer’s entitlement to a refund of an overpayment on social security insurance premiums constitutes an independent legal ground, which is regulated in Section 17 of the Act on Social Security Insurance Premiums, and therefore neither the provisions of the Civil Code on unjust enrichment nor any general three-year limitation period can be applied to it.
If the payer of insurance premiums determines that an overpayment on insurance premiums has occurred, it may obtain a refund of this overpayment only by means of an application for its refund (at the same time, it is necessary to correct the overviews submitted for the above-mentioned period and send them together with the application to the relevant social security administration). It is not possible for it to offset this overpayment (even if it actually exists) by reducing the social security insurance premiums which it is obliged to pay. In such a case, a penalty would arise from such arbitrarily reduced insurance premiums. In view of the above, in our opinion, an application for a refund of the overpayment may be submitted until mid-2012 without the statutory preclusive time limit expiring in vain.
As regards the question of when specifically to submit an application for a refund of the overpayment, the following may be stated. The Regional Court in Ústí nad Labem did rule in favour of the company which decided not to pay social insurance for the period from 1.1.2007 to 30.6.2007, on the grounds that the Act on Social Security Insurance Premiums lacked, as a result of a legislative error by the legislator, a definition of the assessment base for employers. The Regional Court subsequently annulled the decision by which the social security administration assessed the claimant company’s outstanding insurance premiums, and stated that determining the assessment base solely by government regulation, i.e. not by an Act, is contrary to the Constitution. However, the relevant social security administrations are currently rejecting applications for refunds of overpayments and it can therefore be assumed that they will continue in this established practice in the future as well. In such a case, it would be necessary to file an administrative action against the decision of the relevant social security administration. In view of the fact that in the future the social security administrations can be expected to decide in accordance with the decision of the Supreme Administrative Court (which will review the said decision of the Regional Court in Ústí nad Labem), we are of the opinion that submitting an application now would be uneconomical. We rather recommend waiting with the application and submitting it only in the event that the Supreme Administrative Court of the Czech Republic confirms the decision of the Regional Court in Ústí nad Labem.
This text was translated from Czech to English using an AI translator.