Successful defense against tax administration incorrect tax treatment of loans


The Law Firm defended the interests of a client with the tax administration regarding the tax audit act, where corporate tax amounting to EUR 800,000.00 was levied for 2013. We took the defense at the stage of administrative appeal of the tax audit act. The tax levy was due to incorrect tax treatment on the part of the tax authorities of loans given by one of the shareholders to the company. The loans were given in 2003 for 10 years and were not returned to that shareholder. According to the tax authorities the company had to increase its financial result in the year of the maturity of the loans (2013) and the increase had to be made with the entire amount of the loan. The tax authorities considered that there was tax evasion and breach of the tax law. The Law Firm made its point which was adopted by the deciding administrative authority. The tax audit act was repealed.

Our defense was based on the following key points:

  1. Significant misinterpretation on the facts were made in the tax audit act;
  2. The tax authorities did not take into consideration all the relevant documents provided to the audit team, as well as they did not request all the documents necessary for the clarification of the facts in conformity with the law;
  3. The arguments for “remission of the loan” were incorrectly and unreasonably raised, which did not comply with the requirement for the validity of the Contract for debt remission according to Art. 108 of the Obligations and Contracts Act;
  4. The provision of Art. 16 of the Corporate Incomes Tax Act regarding tax evasion was misinterpreted and incorrectly applied.

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