How to substantiate VAT deductions for advertising and consulting services when an invoice is insufficient

What happened in the case of the advertising agency and why the invoice was not enough

The agency provided advertising services at sports matches and in printed periodicals and claimed a VAT deduction on services received from its supplier. The tax authorities did not allow the deduction because the agency failed to prove the scope of the received supplies. The dispute went all the way to the Supreme Administrative Court, which dismissed the cassation complaint (judgment 10 Afs 204/2025 on the SAC search engine).

At the same time, the agency submitted a number of documents and proved that it had received some advertising services. The supplier issued a tax document, which included an order and a handover protocol. The document generally stated "services for an advertising campaign presentation within" a certain sports competition and season, but the scope of the supply was not specified. It could not be deduced from the order, which had no numerical designation, nor from the protocol, which only stated when the services were handed over and to which events the document related.

In response to the second request, the agency submitted further orders and protocols, some of which stated that the scope of the supply would be adjusted operationally according to client requirements and the course of the competition. A number of documents did not state who prepared them and when. In the third request, the tax administrator pointed out inconsistencies in the documents, and although the agency explained them, it did not prove the scope of the supply.

Thus, the decisive factor was not that the agency had no documents. The decisive factor was that it was impossible to retrospectively match what exactly was invoiced in individual tax periods from its documents or other evidence. The court described this as an inability to prove the scope of the supply and stated that this is to the detriment of the person claiming the deduction.

What the law requires and what case law does about it

A taxable person is entitled to a tax deduction for a received taxable supply which they use within their economic activity for the purposes of transactions triggering the right to deduction, typically taxable supplies with the place of supply in the country (Section 72(1) of the Czech VAT Act). However, the mere fact that the company needed the service and used it is not enough for the deduction, because the law links the entitlement to other conditions that the company must be able to document during an audit.

To claim the entitlement, the taxable person must hold a tax document issued by another taxable person (Section 73(1)(a) of the Czech VAT Act). The tax document is the basic evidentiary document for the deduction, but in itself it does not guarantee the entitlement. A company that builds its entire defense on it risks being left without further evidence in case of doubts.

At the same time, the tax document must contain, among other things, the scope and subject of the supply (Section 29(1)(f) of the Czech VAT Act). It was precisely this information that was the problem in the described case, because the documents described the supply in general terms and the scope could not be deduced from them, nor from the related order or protocol.

At the same time, the law anticipates that a document may be defective. If the document does not contain all the prescribed requirements, the right to deduction can be proven in another way (Section 73(5) of the Czech VAT Act). Companies often understand this provision as a safety net. The judgment does not explicitly comment on it, but its general requirement implies that whatever the company uses to document the scope, it must prove it with sufficient specificity, not just generally suggest that some service took place.

The court builds on long-standing case law, according to which, although the documents are crucial, it is necessary to prove that everything happened as stated in them. The taxable person must therefore prove the scope to which the supply took place, and if they fail to do so, the tax administrator will not allow the deduction. The court cites judgments 8 Afs 44/2011, 5 Afs 165/2006, and 7 Afs 224/2020 in this regard.

The taxpayer bears the primary burden of proof and proves all facts that they are obliged to state in their tax return (Section 92(3) of the Czech Tax Code). Conversely, the tax administrator proves facts that refute the credibility, conclusiveness, correctness, or completeness of the submitted documents and records (Section 92(5)(c)). If they challenge them with specific facts, as in the described case with three requests, the taxpayer must dispel the doubts raised with further evidence.

The distribution of the burden of proof between the tax administrator and the taxpayer is analyzed in more detail in the text on the burden of proof in a tax audit. It follows that a company that has high-quality documentation from the beginning does not have to improvise during an audit and can respond to requests within the set deadlines.

What the court said about the "spontaneous" nature of advertising

The agency argued that advertising at sports matches cannot be accurately estimated in advance because the course of the competition is unpredictable and the scope of the supply is adjusted according to the needs of the customers, often without a written trace. The court turned this argument around. Precisely because the cooperation does not have a fixed structure, it was, according to the court, necessary to choose a method of documentation that would make it possible to prove what was ultimately delivered and in what quantity.

The court explicitly suggested a solution: keeping minutes of working meetings where the details of the promotion were discussed, or insisting on consistent logging of services already provided, at least in handover protocols. Proper recording of the scope of the supply, broken down into sub-services and events, was, in its view, desirable precisely with regard to the alleged spontaneous nature. Because the parties did not keep such records, it was impossible, even with the help of other supporting evidence, to retrospectively determine what specifically was invoiced by which document.

These are practical solutions offered by the court, not a new legal obligation. The obligation to prove the scope and subject of the supply is given by law; how the company does this is up to them. Minutes of meetings and detailed protocols are just the most reliable way to bear this burden of proof in cooperation where the content changes on the go.

The court explained the difference from other decisions using two examples. In the Milkpol judgment, it was a case of direct promotion in pre-determined forms, including the specific form of the advertisement, location, and duration, and the customer proved that the advertisement was actually broadcast in its essential parameters. In the case under consideration, on the contrary, it was a resale of packages of unspecified services without further distinction.

The practical conclusion is simple. The less specific the supply in the order, the more it must be documented in the process. A company that buys a package of services with variable content should set a rule from the beginning as to who will record what was actually used from the package and when, so that they do not have to prove the scope from memory years later.

How to write orders and invoices for advertising and consulting

The first principle is to name the subject of the supply specifically already in the order. For advertising, this means stating the type of presentation, location, time, and quantity; for consulting, the topic, scope, and expected output. The order should have a number and a date so that it can be uniquely matched with the invoice and protocol, and it should state the person who issued it.

The second principle is to explicitly describe in the order how the scope is adjusted. If the supply changes according to the course of the campaign or client requirements, it should be agreed that the change will be confirmed in writing, for example by email with name approval, and that it will be reflected in the handover protocol. The court criticized precisely the fact that the orders referred to operational adjustments of the scope and the parties did not keep records from which it would be possible to retrospectively determine what was delivered.

The third principle is that the invoice should distinguish individual services. A mere summary item "services for an advertising campaign" with a single price may be insufficient during an audit if neither the invoice nor the subsequent documents and other evidence can reliably establish the scope and subject of the supply. The invoice should therefore refer to the order and protocol number and break down the items so that they can be matched with specific events or outputs.

The fourth principle is a handover protocol that does not just say "handed over". It should state exactly what is being handed over, when, and to whom, and it should be signed by an identifiable person. For consulting, it is sufficient to attach the outputs or a list of them to the protocol. For advertising, it is useful to attach proof of publication, such as a screenshot, clipping, or recording showing the execution.

How to continuously document supplies so that documents can be matched with the supply

The best documentation is created in the course of cooperation. Short minutes of meetings in which the content of the supply is discussed and a record of who approved them are sufficient. The court described this solution as one that suggests itself. A company that keeps them has exactly the evidence during an audit that the agency lacked in this case.

The second layer is matching invoices with specific supplies. Upon receipt of an invoice from a supplier, someone in the company should check whether it corresponds to the order and protocol and record the result. If the documents are not matched immediately, retrospective matching after years is difficult and unreliable, as shown by the case in which the submitted documents and orders were often not capable of being matched.

The third layer is the link to customers. A company that resells services needs to match what it bought from the supplier with what it delivered to its customers. The court pointed out that in contracts with customers, the supply could be determined, but the scope of the supply from the supplier could not. The company therefore needs records that show the entire chain from purchase to sale.

The fourth layer is preservation. Documentation only makes sense if it survives the periods in which tax is retrospectively audited. The company should therefore determine where and how documents are stored, who is responsible for this, and how they are handed over when employees change. Information stored only in one person's email inbox is easily lost when an employee leaves.

What to do when the tax administrator doubts the scope of supply

In the described case, the tax administrator gradually issued three sufficiently specific requests, expressed doubts about the fulfillment of the conditions for deduction, and communicated by what evidentiary means the situation could be clarified. The agency thus knew what the doubts related to and had the opportunity to dispel them. The court did not agree with the objection that the tax administrator had unlawfully transferred the burden of proof to the agency.

The first principle is to respond to each request specifically and document everything the company has at its disposal. A general explanation that the cooperation was spontaneous will not dispel doubts. Only what can be submitted will help: specific minutes, protocols, communication, outputs, and matching with invoices, or a witness statement that specifically describes what was delivered.

The second principle is to propose evidence in a timely and specific manner. In connection with proposals for audio recordings, the court pointed out that the company must state what the recording should prove, and that a witness who signed a statement protocol thereby expressed consent to its content. A proposal of evidence without stating what it is intended to prove may therefore not be carried out.

The third principle is not to attribute an intention to the tax administrator that they did not express. The agency objected that the tax administrator suspected it of fraud, but the court found that nothing of the sort was implied and that the issue was whether the scope of the supply had been proven. A defense built on a perceived accusation did not help the company because it distracted attention from what was missing in the evidence.

When preparing for an audit, it is useful to know the procedure described in the text on tax audits in 2026. A company that knows how an audit is conducted and what deadlines apply responds to requests factually and in a timely manner and does not waste time, which is often the most valuable asset during repeated requests.

The general boundary between claiming a deduction and challenging it is also addressed in the text on the SAC decision on abuse of rights in the area of VAT. However, this is a different issue than proof of the scope of the actually received supply, although the two often meet during an audit and the company must therefore be prepared for both at the same time.

Parallel audits and action against unlawful interference: what the court said about fragmented procedures

The agency was audited in seven separate audit procedures by five different tax administrators, even though they concerned the same suppliers and differed only in the tax period. It claimed that it had to perform each procedural act seven times and spent over CZK 3.5 million on this. The court therefore had to assess whether such a procedure affects the legality of the decision on tax assessment.

The court stated that such fragmentation can be considered an disproportionate exercise of selected competence, and described the procedure in the given case as disproportionate. The tax administrator is to protect the rights of taxpayers and proceed in such a way that no one incurs unnecessary costs (Section 5(3) and Section 7(2) of the Czech Tax Code). According to the court, the institute of selected competence should serve for a more effective performance of tax administration, not for multiplying procedural acts, and fragmentation into parallel proceedings without an obvious reason runs counter to the principles of tax administration.

According to the court, protection against unlawful procedures can be sought primarily through an action against unlawful interference, but it can also be objected to in an action against the decision on tax assessment, where the options are more limited. The disproportionate fragmentation of audits alone does not yet lead to the annulment of the tax decision; it would have to have a proven effect on its legality or correctness. In this case, this was not proven and, according to the court, the procedure was not abusive.

For a company, this leads to practical advice. In the event of repeated audits of the same suppliers, it is advisable to keep track of all procedures, submitted evidence, and costs incurred, and to consider an action against unlawful interference in a timely manner. In addition, the Tax Code explicitly allows the tax administrator to perform acts for different proceedings jointly for reasons of economy, and the company can therefore propose a joint procedure itself.

Quite independently of this, it is good to have the evidence folder prepared for all audited periods at once. A company that submits complete documentation for the entire cooperation with the supplier during the first audit reduces the risk of identical requests being repeated. If they are nevertheless repeated, it has proof of what was submitted and when. How to verify a supplier before the first order is described in the text on verifying a supplier so that the tax office does not reject your deduction.

Exactly how to set up the documentation of advertising and consulting services and the response to an audit depends on the structure of the cooperation and on how many suppliers the company uses – which is why the lawyers of the Prague-based ARROWS law firm always assess this according to the specific company and its supply chain, not according to a universal template, which would mean a different risk for each cooperation.

Risks of undocumented scope of supply

Final summary

In August 2026, the Supreme Administrative Court confirmed that when claiming a VAT deduction for advertising services, the taxable person must prove not only the receipt of the supply but also its scope, and that the alleged spontaneous nature of the cooperation does not exempt them from the burden of proof. The article showed that an invoice with a general description alone is not enough if the scope cannot be documented otherwise, that any other evidence must be specific, and that it is worth keeping minutes of meetings and consistent logging in the course of cooperation.

For the company management, this implies a clear task: for advertising and consulting services, set up orders, invoices, and protocols so that specific supplies can be retrospectively matched from them. Documenting the scope from memory after years will not succeed during an audit, and failure to document is to the detriment of the taxpayer.

The lawyers of the Prague-based ARROWS law firm set up documentation for advertising and consulting services, prepare templates for orders and protocols, and represent companies in tax audits. Write to us at consultation@arws.cz or review our tax advisory services.