In its judgment of 1 April 2026 (Case No. 31 Af 5/2025-128), the Regional Court in Brno examined the limitation periods for imposing a levy for breach of budgetary discipline in a project co-financed by EU funds. The court followed the judgment of the Court of Justice of the European Union in Mikroregion Porta Bohemica, holding that Regulation (EC, Euratom) No. 2988/95 applies with priority to such cases, including the portion of the project financed from national funds.

This has a significant impact on both the length of the limitation periods and the point at which they begin to run. While Czech law allows a levy to be imposed within a ten-year limitation period, under the EU framework proceedings must generally be initiated within four years from the occurrence of the irregularity, and the levy must be imposed no later than the absolute limitation period of eight years.

The court also emphasized the distinction between a breach of budgetary discipline and an irregularity under EU law. A breach of budgetary discipline occurs only when the beneficiary breaches an obligation attached to the grant and has already received the funds affected by that breach. An irregularity, however, may arise at an earlier stage: it is sufficient that an obligation has been breached in a manner that actually or potentially jeopardizes the EU budget. It is the occurrence of such an irregularity that triggers the running of the EU limitation periods.

In the case at hand, the court concluded that, with respect to four of the five audit findings, the State’s right to impose the levy had already become time-barred. These findings concerned, among other things, irregularities in a public procurement procedure, failure to publish mandatory information, claiming grant funding for VAT, and failure to notify a change in VAT payer status. Consequently, the court annulled the decisions imposing levies exceeding CZK 3.4 million.

Author: Jan J. Šlajs