How can a foreign company defend itself against a fine imposed by the Czech customs authority?

Receiving a fine from the Czech Customs Administration can pose a serious challenge for any foreign company operating in the EU. This article offers a clear step-by-step guide to defending your business. As a leading Czech law firm in Prague, our English-speaking lawyers help international clients navigate complex customs regulations. We outline your rights, key deadlines, and strategic actions to safeguard your company’s financial interests.

Need advice on this topic? Contact ARROWS Law Firm at office@arws.cz or +420 245 007 740. Your question will be answered by "JUDr. Jakub Dohnal, Ph.D., LL.M.", an expert on the topic.

Why Did the Czech Customs Authority Fine Your Company?

Navigating the customs landscape of the European Union can be complex, and while some penalties are issued for deliberate violations, many fines received by foreign companies stem from unintentional errors. The Czech Customs Administration (Celní správa České republiky) enforces both national laws and the EU's Union Customs Code (UCC), which creates a strict regulatory environment where mistakes can be costly.

The Czech Customs Act (Zákon č. 242/2016 Sb.) outlines specific offenses (přestupky) that frequently affect international businesses. A key point for foreign managers to understand is that the system often operates on a principle of strict liability. This means that an "honest mistake" is not necessarily a valid defense; the impact of the error is what primarily determines the consequence.

Common violations include:

• Incorrect Tariff Classification: This is one of the most frequent sources of error. Goods imported into the EU must be classified under a specific code in the Integrated Tariff of the European Communities (TARIC). Using the wrong code can lead to an incorrect calculation of customs duties, resulting in underpayment and a subsequent penalty.
• Customs Valuation Errors: Intentionally or unintentionally undervaluing goods on a commercial invoice to reduce the customs duty liability is a serious offense. This can lead not only to substantial fines but also to the seizure of goods and heightened scrutiny of all future shipments.
• Documentation and Procedural Failures: Simple administrative mistakes can have severe financial repercussions. This includes presenting incorrect or altered documents, failing to provide a valid Certificate of Origin to claim preferential tariff rates, or not retaining essential customs records for the legally required 10-year period.
• Improper Handling of Goods: Physical breaches, such as removing goods from a customs warehouse without authorization or breaking an official customs seal, are treated as serious violations of customs supervision.

For these types of offenses, the Customs Administration can impose a fine of up to CZK 4,000,000 (approximately EUR 160,000). This significant penalty highlights the importance of getting customs procedures right from the start.

Risks and penalties	How ARROWS helps
Incorrect tariff classification leading to underpayment of duties. Penalty: Up to CZK 4,000,000 fine and a customs debt assessment.	Legal analysis of your customs declaration to verify classification. Want to understand your legal options? Email us at office@arws.cz.
Undervaluing goods on the commercial invoice. Penalty: Significant fines, seizure of goods, and potential criminal investigation for fraud.	Representation in proceedings with the customs authority to challenge valuation assessments. Need legal representation? Write to office@arws.cz.
Missing or invalid Certificate of Origin, resulting in loss of preferential tariff rates. Penalty: Assessment of full customs duty plus a fine for incorrect declaration.	Drafting documentation to ensure compliance with origin rules. Do you need documentation prepared? Contact us at office@arws.cz.
Failure to retain customs documentation for the required 10 years. Penalty: Fine up to CZK 4,000,000.	Preparation of internal company policies for compliant record-keeping. Get tailored legal solutions by writing to office@arws.cz.

Your First 24 Hours: Critical Steps After Receiving a Fine

The actions your company takes in the first hours after receiving a decision imposing a fine are critical. A rushed or uninformed response can compromise your ability to mount a successful defense. It is essential to act methodically and seek professional legal advice without delay.

Here are the most important initial steps:

• Do Not Pay the Fine: The most common mistake is to pay the fine immediately to resolve the issue. In Czech administrative law, paying a penalty can be legally interpreted as an admission of guilt, which may forfeit your right to appeal the decision.
• Contact a Specialized Law Firm Immediately: The deadline to challenge the fine is extremely short. You need an expert who understands Czech customs law and the administrative process to assess the decision and advise on the best course of action.
• Preserve All Documentation: Gather and secure all relevant documents. This includes the official decision from the customs authority, the customs declaration (JSD/SAD), commercial invoices, transport documents (like a CMR or Bill of Lading), and any correspondence with customs officials or your customs broker.

The moment the customs authority issues a fine, it initiates a formal legal process known as správní řízení (administrative proceedings). In this process, your company is considered a formal "participant" (účastník řízení) with legally defined rights and obligations. Understanding and exercising these rights is the key to a successful defense.

For foreign companies, a unique risk lies in internal communication delays. The strict 15-day appeal deadline begins the moment the decision is officially delivered, for instance, to your company's Czech data box (datová schránka) or registered address. 

If the local office takes several days to forward the document to the regional headquarters or the corporate legal department abroad, a significant portion of the response time can be lost before the relevant decision-makers are even aware of the issue. This makes a swift response protocol absolutely essential.

FAQ – Legal tips about the initial response to a customs fine

• Should I just pay the fine to make the problem go away?
  No. Paying the fine can be seen as admitting you were wrong, which may prevent you from challenging it. For immediate assistance on the best strategy, write to us at office@arws.cz.
• How long do I have to decide what to do?
  The deadline for the first formal appeal is extremely short—only 15 days from when you receive the decision. It is critical to act fast. Our lawyers are ready to assist you – email us at office@arws.cz.

The First Formal Challenge: Filing an Administrative Appeal (Odvolání)

The first and most important step in formally challenging a customs fine is to file an administrative appeal, known in Czech as an odvolání. This is a powerful legal tool, but it is governed by strict procedural rules and deadlines that must be followed precisely.

The appeal process for a customs fine is governed by the Czech Administrative Procedure Code (Act No. 500/2004 Coll., or správní řád). This is a critical distinction, as other customs-related decisions, such as those concerning the amount of customs debt, may fall under the Tax Code, which has different rules and deadlines. 

A foreign company could easily receive two decisions related to the same shipment—one for the fine (with a 15-day appeal deadline) and one for the customs debt (with a 30-day appeal deadline)—and mistakenly apply the longer deadline to both, which would be a fatal error for challenging the fine.

Key steps for filing an odvolání:

1. Observe the 15-Day Deadline: The appeal must be filed within 15 calendar days from the date your company was officially notified of the decision. This deadline is absolute.

2. File with the Correct Authority: The odvolání must be submitted to the same customs office that issued the original fine, not its superior authority.

3. Meet Formal Requirements: The appeal must be submitted in writing (including electronically via a data box) and must contain specific information:

• Who is filing the appeal (your company's full identification).
• Which specific decision is being challenged (referencing its file number).
• The extent of the challenge (e.g., challenging the entire decision or only the amount of the fine).
• The grounds for the appeal (explaining why the decision is factually incorrect or legally flawed).
• A proposal for the outcome (e.g., requesting the cancellation of the decision).

One of the most significant advantages of filing a timely appeal is the automatic application of odkladný účinek (suspensive effect). This legal principle means that the moment a valid appeal is filed, the decision to impose the fine is suspended. It is not legally final or enforceable until the appeal process is concluded. For your business, this is a crucial benefit: you are not legally obligated to pay the fine while your appeal is being considered, which protects your cash flow.

Risks and penalties	How ARROWS helps
Missing the strict 15-day appeal deadline. Penalty: The fine becomes final and legally enforceable; the right to appeal is lost.	Representation in administrative proceedings to ensure all deadlines are met. For immediate assistance, write to us at office@arws.cz.
Filing the appeal with the wrong authority (e.g., the superior body instead of the issuing office). Penalty: The appeal is considered improperly filed and may be rejected.	Drafting legally required documentation to ensure procedural correctness. Get tailored legal solutions by writing to office@arws.cz.
Submitting an appeal with missing formal requirements (e.g., not stating what you propose). Penalty: The authority may halt the proceedings if defects are not corrected in time.	Legal consultations to explain your rights and obligations during the appeal. Need legal help? Contact us at office@arws.cz.
Failing to understand that the suspensive effect (odkladný účinek) applies, and paying the fine unnecessarily. Penalty: Negative impact on cash flow and potential weakening of your legal position.	Legal analysis of your case to leverage all procedural advantages. Want to understand your legal options? Email us at office@arws.cz.

When the Stakes are Higher: Taking Your Case to Court (Správní žaloba)

If the Customs Administration's appellate body rejects your odvolání, the decision to impose the fine becomes final and legally enforceable. At this point, the administrative process is exhausted. Your company's final option for defense is to seek judicial review by filing an administrative action, or lawsuit, known as a správní žaloba, with the competent Czech regional court.

This step moves the dispute from the administrative authority to the independent judiciary. However, the nature of the review changes significantly. The court's primary role is not to conduct a new, full investigation of the facts. Instead, it examines the legality of the customs authority's final decision and the administrative procedure that preceded it. Success at this stage requires a shift in strategy from arguing the facts to demonstrating legal or procedural error.

Key aspects of a správní žaloba:

• Deadline: The lawsuit must be filed within two months of the date your company received the final decision from the appellate administrative body.
• Key Arguments: The lawsuit must articulate specific legal arguments, known as "žalobní body" (points of action). These arguments must focus on legal flaws, such as:

• The customs authority misinterpreted the relevant customs law.
• The authority failed to properly establish the facts of the case.
• The authority violated your company's procedural rights during the administrative proceedings.
• The imposed fine was disproportionate to the violation.

• Costs: Filing a správní žaloba involves a court fee, which is currently CZK 3,000 for an action against a decision of an administrative authority, in addition to the costs of legal representation.

For international companies, it is important to recognize that while the procedure is governed by Czech law, the substantive customs regulations are often rooted in the EU's Union Customs Code (UCC). This interplay between national and EU law requires specialized expertise. 

ARROWS, as an international law firm operating from Prague, European Union, leverages its ARROWS International network, built over 10 years, to provide clients with comprehensive legal support that accounts for these complex cross-border dimensions.

Proactive Strategy: How to Prevent Future Customs Penalties

Challenging a customs fine is a reactive measure. The most effective long-term strategy for any foreign company is to build a robust internal compliance framework to prevent violations from occurring in the first place. Strong compliance is not merely a defensive cost; it is a competitive advantage that reduces risk, prevents costly delays, and builds a reputation for reliability with customs authorities, which can lead to benefits like access to simplified customs procedures.

ARROWS provides a range of preventative legal services to help your business operate smoothly in the Czech Republic and across the EU. Key proactive steps include:

• Developing Internal Policies: We can assist in the preparation of internal company policies that standardize procedures for customs declarations, valuation, and, crucially, document retention to meet the 10-year legal requirement.
• Professional Employee Training: Human error is a leading cause of customs violations. We offer professional training for employees or management (with certificates) to ensure your logistics, finance, and sales teams understand their roles and responsibilities in maintaining customs compliance.
• Securing Legal Certainty: For goods with ambiguous classification, your company can apply to the customs authorities for a Binding Tariff Information (BTI) decision. A BTI provides legal certainty on the correct tariff code to use for specific goods throughout the EU, effectively eliminating classification risk for future imports.
• Strategic Legal Consultation: Regular legal consultations can help your business stay ahead of changes in customs law and ensure that your commercial strategies are fully compliant. We can also provide formal legal opinions on complex customs matters to support your internal decision-making.

Risks and penalties	How ARROWS helps
Lack of standardized internal procedures for customs declarations. Risk: Inconsistent and error-prone filings, leading to repeated fines and supply chain disruptions.	Drafting documentation and internal policies to standardize your compliance. Do you need a contract prepared? Contact us at office@arws.cz.
Insufficient training for staff involved in the import/export process. Risk: Costly mistakes made by employees who are unaware of their legal obligations.	Professional training for employees to minimize human error. Our lawyers are ready to assist you – email us at office@arws.cz.
Failure to seek binding legal opinions on complex classification or origin issues. Risk: Operating with legal uncertainty, which can lead to unexpected, large-scale penalties after a customs audit.	Providing formal legal opinions on your customs strategy. Get tailored legal solutions by writing to office@arws.cz.
Treating customs compliance as a purely logistical task, not a legal one. Risk: Missing critical legal changes and failing to adapt processes, exposing the company to new forms of liability.	Legal consultations to ensure your business strategy is aligned with current customs law. Do not hesitate to contact our firm – office@arws.cz.

Your Partner in Czech Customs Law

Dealing with the Czech Customs Administration requires navigating a complex web of national and EU regulations, strict deadlines, and specific procedural requirements. An error at any stage can result in significant financial loss and operational disruption. Your company needs a legal partner with proven experience in this specialized field.

ARROWS lawyers supports over 150 joint-stock companies and 250 limited liability companies, providing them with high-quality, practical legal solutions. As a leading Czech law firm in Prague, EU, we are perfectly positioned to represent your interests before Czech authorities and courts. Our team combines deep local knowledge with an international perspective, ensuring that foreign clients receive advice that is not only legally sound but also commercially pragmatic.

To protect your business and resolve your customs issue effectively, contact our expert team today. Get tailored legal solutions by writing to office@arws.cz.

FAQ – Most common legal questions about Czech Customs Fines

• How long does the entire appeal process take?
  The administrative appeal (odvolání) should be decided by the superior authority within a reasonable timeframe, often within 30-60 days. If the case proceeds to court (správní žaloba), it can take significantly longer, potentially several months to over a year, depending on the court's workload and the case's complexity. For a precise evaluation of your case's timeline, please contact us at office@arws.cz.
• Can the customs authority seize my goods?
  Yes. In cases of suspected violations, especially concerning intellectual property rights, restricted items, or significant duty evasion, the customs authority has the power to detain or seize goods pending investigation and legal proceedings. To understand how to protect your assets, get immediate assistance by writing to us at office@arws.cz.

• What are the costs involved in challenging a customs fine?
  The administrative appeal (odvolání) itself has no filing fee. However, it involves legal costs for preparing the submission. If you proceed to court (správní žaloba), there is a court filing fee of CZK 3,000, plus legal fees for representation. Our lawyers can provide a clear cost estimate for your case; email us at office@arws.cz.

• Is it possible for a customs violation to lead to criminal charges?
  Yes, in serious cases. While most violations are treated as administrative offenses (přestupky), intentional and significant customs duty evasion can be classified as a criminal offense, potentially leading to criminal liability for both individuals and the company itself. If you suspect your case has criminal implications, it is vital to seek expert legal defense. Contact our firm immediately at office@arws.cz.
• My company is based in Germany/the UK. How is the Czech appeal process different?
  The core principles are similar across the EU, but procedural details vary significantly. For example, the Czech Republic has a very short 15-day deadline for the initial administrative appeal, and unlike in Germany, this appeal automatically suspends the payment obligation. Understanding these local differences is key to a successful defense. Our international law firm, operating from Prague, European Union, specializes in these cross-jurisdictional nuances. For tailored advice, contact us at office@arws.cz.

• What if we made a genuine mistake? Can we just explain it to the authorities?
  While cooperation is important, many customs regulations operate on a strict liability basis, meaning the violation itself is punishable regardless of intent. Simply explaining a mistake is often not enough to have a fine cancelled. A formal, legally sound appeal is necessary to properly defend your position. Let our lawyers formulate the strongest possible argument for you by writing to office@arws.cz.

Don't want to deal with this problem yourself? More than 2,000 clients trust us, and we have been named Law Firm of the Year 2024. Take a look HERE at our references.