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Late filing of sales tax returns is always tax evasion

Lately we found ourselves in the district court with a client, a company with a single-digit million turnover, before the court of lay assessors. Expected imposed punishment at least two years!

What had happened?

For three years, due to internal quarrels, the company had submitted its annual VAT tax returns partly and with considerable delay. The calculated sales tax amounted to several hundred thousand euros per calendar year, however, taking into account the advance payments made, the outstanding amount was only a few tens of thousands of euros!

Nevertheless, in this case when the Federal Court of Justice is formally implementing current law, the following findings are arrived at with regards to intentional tax evasion:

Even a late submission of only 1 day for tax returns amounts to a planned tax evasion with criminal intent and long term planning;
The advance payments of VAT are not taken into consideration with regards to the amount of tax evasion, which means that the extent of tax evasion in the present case was treated as if many hundreds of thousands of euros were still owed!

However, the Federal Fiscal Court changed this somewhat abstruse application of law by taking "mitigating" circumstances into account with regards to sentencing.

But this does not change the fact that this ruling impacts all those who are affected: Taxpayers, judges, public prosecutors and advisors are all put into situations where legal processing and working on solutions does not correspond with everyday reality. This legal practice puts public prosecutors under pressure to pursue everyday situations with increased threat of punishment. That in turn forces taxpayers and their advisors to defuse comparatively 'normal' situations with a disproportionate amount of effort and resources. This approach criminalises the 'normal' taxpayer to an unnecessary degree and ties up the resources of the public prosecutor's offices and courts in the wrong place.

It would be a good thing if the Federal Court of Justice were to clarify its administration of justice and adapt it to actual everyday circumstances.

PS: The case was closed after a lot of number crunching and juggling of data and it resulted in a small fine!

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