2023-11-02 04:34:14
Even when the business manager has authorized the tax authorities to carry out an inspection on his premises, he can withdraw his consent at any time, according to a recent judgment of the Court of Cassation.
A tax inspection is not a search by the public prosecutor’s office. During a search, the public prosecutor’s office is authorized to use the necessary force, as long as it is proportional, whereas during an on-site inspection, the tax authorities rely on the cooperation of the taxpayer. The debate has raged for years over the concrete latitude given to the tax authorities to carry out this control. Two recent judgments from the Court of Cassation provide a little more clarity.
In a judgment of October 6, the Court of Cassation now extends this reasoning to the tax inspection of professional premises. The judgment also clarifies the scope of the tax authorities’ right of investigation. “In the case in question, the tax authorities carried out searches at the premises of a company whose directors had authorized the visit. Later, the directors felt that the tax authorities had gone far too far because they had also searched through containers, trash cans and cabinets,” explains Svyatoslav Gnedash, partner and head of tax litigation at Eubelius.
“The Court of Cassation confirms the possibility for the taxpayer to refuse to cooperate and to verbally object to the visit as such, whether before or during it (in the professional premises or at home).”
Verbal opposition
The Court of Cassation now confirms that, during a visit authorized by the business manager, the tax authorities can also examine the books and documents found in closed furniture, trash cans or refrigerators within the company. But the Court limits this power of investigation: it does not apply only if the taxpayer does not object. If he objects, the research cannot continue. “In the case in question, there was no (timely) protest and the examination was not deemed illegal,” says Svyatoslav Gnedash.
According to the lawyer, these recent judgments somewhat clarify the limits of the law of tax inspections. “The Court of Cassation confirms the possibility for the taxpayer to refuse to cooperate and to verbally object to the visit as such, whether before or during it (in the professional premises or at home), or at the examination of certain documents or places.”
More, the taxpayer cannot object to the visit without valid reason. According to the lawyer, one has the right to object, for example, if the tax authorities disproportionately or illegally infringe on the right to privacy, or if it diverts the investigation from its purpose and abuses its power. “For example, in the context of investigations into direct taxes, the tax authorities cannot visit customers or suppliers,” explains Svyatoslav Gnedash.
Another valid reason: if it turns out during the visit that the tax authorities want to investigate specific past transactions, for which the normal deadline has expired and for which the tax authorities did not notify the taxpayer in advance of the extension of the investigation period.
“Verbal opposition is the only possible protection, since if one resists physically, one risks being accused of rebellion.”
Unjustified oppositions are sanctioned
The taxpayer must be able to provide proof of his opposition. Otherwise, the tax authorities’ investigative actions will be difficult to challenge subsequently. “In the event of unjustified opposition, we are exposed to administrative fines and, in the event of proven fraudulent intent, to lawsuits. In addition, the tax authorities will always try to enforce the obligation to cooperate through the courts by imposing penalties,” warns the lawyer.
Selon Svyatoslav Gnedasj, the applicability of the tax authorities’ right of access remains its Achilles heel. “But this is a necessary balance. Otherwise, the taxpayer would have virtually no protection during and following such a visit. Verbal opposition is therefore the only possible protection, since if one physically resists, the “We risk being accused of rebellion. The judgments of the Court of Cassation therefore somewhat rebalance the rights and obligations of taxpayers, but we are still waiting for a legislative amendment which would clarify the rules of the game and establish the necessary protection mechanisms“, he concludes.
Following the June judgment, the FPS Finances wanted to emphasize that the judgment of the Court of Cassation was not a free pass for taxpayers who refuse to cooperate with an audit, recalling in passing the fines and aforementioned penalties in the event of unjustified opposition.
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