Call for repayment of subsidy - illegal intervention?
According to § 14f (3) of Act No. 218/2000 Coll., on budgetary rules as amended (hereinafter referred to as "ZRP"), the provider shall call upon the beneficiary of the subsidy in writing to repay the subsidy or a part thereof within a time limit set by the provider if, on the basis of an audit finding, the provider reasonably believes that the beneficiary of the subsidy, in direct connection with the subsidy, has breached an obligation laid down by a legal regulation, has failed to comply with the purpose of the subsidy, or has breached another condition under which the subsidy was provided and for which it is not possible to call for corrective measures to be taken when the nature of the misconduct does not allow for correction.
Pursuant to Section 14f(4) ZRP, the amount proposed in the request for repayment of the subsidy or part thereof must be set within the limits of the amounts calculated pursuant to Section 14(6) ZRP. According to this provision, the provider may stipulate in the decision on granting the subsidy that failure to comply with certain conditions under Section 14(4)(g) of the Financial Regulation or breach of an obligation laid down by law will be penalised by a levy for breach of budgetary discipline lower than the total amount of the subsidy.
When setting a lower levy, the provider must indicate a percentage range or a fixed percentage relating either to the total amount of the grant or to the amount of the breach of budgetary discipline or set a fixed amount of the levy. In doing so, it must take into account the seriousness of the breach of budgetary discipline and its impact on the maintenance of the purpose of the grant.
It follows from the above that the provider of the subsidy is not only obliged to state in the request for repayment the extent to which it requires the repayment of the subsidy, but is also obliged to justify what considerations it used in determining the financial correction. Such determination must then include an assessment of the extent of the breach of the grant conditions, respecting the principle of proportionality.
The decision to impose a financial correction must therefore always include a reviewable assessment of the gravity, consequences and circumstances of the infringement. If the decision does not contain these elements, it is a purely formalistic approach, as the Supreme Administrative Court also states in its judgment of 25 June 2008, No 9 Afs 1/2008-45, where it states that 'a penalty levy must always be linked only to the unlawful use of State funds and its imposition cannot be based on a purely formalistic approach, without taking into account the actual state of affairs. The key to the assessment of the case is therefore whether the taxpayer used the funds provided to cover costs directly related to the financing of the project supported.'
Thus, if the decision on the determination of the amount of the financial correction does not contain the above-mentioned elements, it is fundamentally flawed from the point of view of the FRA and fulfils the definition of unlawful interference by an administrative authority in the sphere of the beneficiary of a subsidy. Such a decision is then actionable against the unlawful interference of an administrative authority, provided that the other conditions for the admissibility of an action against an unlawful interference of an administrative authority are met.
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