new audits and disputes · 2020. 9. 9. · audits and disputes: italy general framework trends...
TRANSCRIPT
International VAT Conference 2020
Webinar series
September 9th 2020
Audits and Disputes
Agenda
1 INTRODUCTION
2 JURISDICTIONS OVERVIEW
3 BINDING POSITION / RULINGS:
KRAKVET MAREK BATKO TJUE HOLDING
Speakers
Maria Antonia
AzpeitiaPartner
mariaantonia.azpeitia
@bakermckenzie.com
Linnea BackPartner
linnea.back
@bakermckenzie.com
Alexander BychkovPartner
alexander.bychkov
@bakermckenzie.com
Mariacristina
ScarpaAssociate
mariacristina.scarpa
@bakermckenzie.com
Ariane SchaafCounsel
ariane.schaaf
@bakermckenzie.com
Piotr TataraAssociate
piotr.tatara
@bakermckenzie.com
David JamiesonPartner
david.jamieson
@bakermckenzie.com
Thierry VialaneixSenior Counsel
thierry.vialaneix
@bakermckenzie.com
Introduction
1
Jurisdictions Overview
2
VAT Audits and disputes: France
General
frameworkTrends
Managing VAT
audit consequences
Standard rules applies
No specific VAT audit process
No «VAT» court for appeals
No VAT audit team per se
Statute of limitation 3 to 10 years
Possibility to have tax audits only
focused on VAT (e.g. after VAT
credit claims)
No specific joint VAT responsibility
except for e-platforms and frauds
5 % penalty on non
self-assessed VAT
Invoices are key elements of the
VAT audit
Importance of formalism in general
(transport documents etc..)
Appetite for penalties applicable to
invoicing requirements (€15 x missing
information on each invoice)
Increasing trend for applying
penalty for voluntary breach of the
law (twice in 6 years criminal
prosecution)
Heavy influence of the CIT approach
for interpreting rules notably on
PE/FE issues
Binding rulings process available but
long (need to anticipate)
Discount on interest and penalties in
case of voluntary disclosure
No possibility to settle on the VAT
due (only on penalties) Exception :
discretionary power to withdraw VAT
reassessment if retroactive recognition
of VAT FE and VAT was self-assessed
by client
VAT Regularization process with
suppliers or B2B customers
available (charging VAT retroactively)
Referral to ECJ is a long process that
remains exceptional
VAT Audits and disputes: UK
General
frameworkTrends
Managing VAT
audit consequences
VAT (specialist) officers and specialist
tax tribunal
Statute of limitation 2-4 years (20 years
if taxpayer is not registered in the UK)
30-100% penalty for undeclared
VAT (if taxpayer did not exercise
reasonable care).
Increased use of "protective"
assessments
Focus on penalties
Uncertain tax positions – proposed
new legislation
Pushing tax enforcement to business
Joint liability for e-commerce
marketplaces
Corporate criminal offence
Binding rulings process available, but it
is not a user-friendly process
Litigation and Settlement Strategy and
Governance processes
Discount on penalties in cases where
there is unprompted disclosure
Brexit – impact on legal process
Audits and disputes: Italy
General
frameworkTrends
Managing VAT
audit consequences
Standard rules applies
No specific VAT audit procedure
No dedicated VAT audit team/auditors
No dedicated VAT courts
Statute of limitation 4 to 10 years
Possibility to have tax audits only
focused on VAT (e.g. in case of
cross-audits)
Penalties generally ranging from 90 to
180% of the unreported VAT amount
Invoices and formalities are key
elements of the VAT audit
Importance of formalism in general
Main focus of VAT audits is on
compliance with VAT formalities,
correct reporting and performance
of IC sales, territoriality rules and
pro-rata rules
Heavy influence of the CIT
approach on deduction of costs
on VAT deduction
Binding rulings process available but
long (need to anticipate)
Discount on interest and penalties in
case of voluntary disclosure
No possibility to settle on the VAT
due (only on penalties)
Settlements available in case of audit
Referral to ECJ is a long process that
remains exceptional
Audits and disputes: Poland
General
frameworkTrends
Managing VAT
audit consequences
Two types of tax offices: Local tax offices
(they carry out desk audits and routine
VAT audits) and tax&customs offices
(thay carry out , aggresive" VAT audits
aimed at imposing VAT sanctions);
Officers are familiar with VAT issues;
Statute of limitation is 5-6 years;
Taxpayers have the right to file a
correction of VAT return after the VAT
audit ends. Otherwise an assessment
proceeding is inititated;
30-100% VAT Sanction (in some
situations, this is 15% or 20%, depending
in procedural aspects).
Does a criminal proceeding (initiated in
an instrumental way) suspend the
statute of limitation period ?
Broad interpretation of FE concept;
Is Polish VAT Sanction in line with the
EU VAT principles (set out in Tibor
Farkas C-564/15 case) ?
Is Polish specific "three months rule"
for reverse-charge transactions in line
with the EU VAT law ?
Binding rulings process available;
During VAT audits the tax authorities
tend to point to the differences between
background facts presented in the tax
ruling request and the facts established
by them during the VAT audit.
Consequently they claim that a tax
ruling is not binding to them;
Binding position / rulings: KrakVet Marek Batko TJUE holding
3
Polish Tax Authorities ruling:
No distance sales regime
Subject to Polish VAT
Poland Hungary
KrakVet
Pet food
Recommended
carrier
Transport
Other carriers
Pick-up at warehouses
Hungarian Tax Audit:
FE in Hungary?
Inquiries to Polish TA
VAT + Interests + penalties: thus,
double taxation
Court TJUE: C-276/18; 18 June 2020
TJUE holding
VAT Directive and Art. 7, 13 and 28 to 30 of Regulation on administrative
cooperation and combating fraud not precluding a MS from unilaterally
subjecting transactions to different VAT treatment from that under which they
have already been taxed in another MS.
Comments
Shows a clear pitfall of VAT system in cross-border transactions, even
if not recognised. Reference to Compass Contract Services, C-38/16 and
its precedents.
How to ensure fair application of TJUE criteria in both MS removing
obstacles like:
■ Statute of limitations
■ Limitations in National remedies
■ Penalty systems
Is VAT being left behind vs. direct taxation in the implementation of solutions
to avoid double taxation?
Questions
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