Act no. 246/2012 (hereinafter “the Act”) passed on 26th July 2012 amended VAT law no. 222/2004 as well as certain other laws, such as Criminal Law, The Commercial Code and Tax Administration Law (Tax Order). The primordial aim of the Act is action against tax fraud; provisions of the Act which serve for this purpose became effective on the 1st October 2012. One of the main tools, the use of which has been extended due to the action against tax fraud, is the liability for tax. This tool has been introduced before, however the Act has now amended article 69 sections 12- 14, as well as adding a new article 69b. The principle of the amendment is that the buyer shall be liable for the tax stated on the invoice, in case the supplier did not pay it or he became unable to pay it and the buyer knew or should / could have known that the tax the tax, or part of it, would not be paid. The legal fiction of the buyer’s knowledge shall be applied in the cases which are stated in the act, such as
– disproportionately high or low invoiced price,
– continuation in the business activity with an entity which met the conditions for VAT deregistration even after the day the entity was published in the list of entities maintained by the Ministry of Finance,
– personal connections between the statutory bodies and/or partners of a supplier and a buyer.
According to article 69b section 1, the buyer who is liable for the tax shall be obliged to pay the tax stated in the invoice if the supplier fails to do so. The explanatory report in relation to the liability for tax is very brief; it only states that the conditions mentioned above shall all be met at the same time. Having read article 69 and 69b, one can hardly avoid the impression that the legislators did not take into consideration real business life with its plenty of business relationships. The above mentioned provisions evoke a situation as if there is only one unique business relationship between the supplier and buyer, the result of which is then one unique invoice. It is therefore not quite clear how the tax authority shall apply the respective provisions of the act, whether there will be a proportional liability or if one buyer will pay for all. According to the Act, the competent tax authority shall pass a decision with respect to which person is liable, i.e. the buyer shall be obliged the pay the unpaid tax within the period of 8 days. It is of course possible to file an appeal against such a decision, although the problem is that such an appeal does not have a suspensive effect. In case the liable person would like to look at the supplier’s tax file, he may do so, though with certain limitations. We believe that the provisions we have briefly mentioned will be shortly amended, due to the fact that their application opens many potential legal problems.
The act introduces the obligation of the tax authority to publish a so-called black list of the entities who have met the conditions for the VAT deregistration. These conditions are stated in the article 81, par. 4b, point 2.They shall apply to the entities which repeatedly in one calender year did not either fulfil the duty to file the tax return, did not pay tax, are not reachable on their business address, or they have breached duties related to tax inspection. The duty of the Tax Directorate to prepare the black list has been postponed to 1st January 2013, as there is also the necessity to amend the provisions of the Tax Order in relation to tax secrecy.
The new article – 105b – was introduced to the Commercial Code. According to the article, the limited liability company (hereinfter “sro”) cannot be founded by a person who has unpaid tax outstanding. Such an outstanding tax cannot exceed 170 Euros. Furthermore, one important issue introduced by the Act applies to the change of a partner in the sro as a result of the transfer or division of the majority share in the company. The foundation of an sro, as well as the above mentioned change of a partner in the sro, must be approved by the Tax Administrator for both the partner as well as the transferee.
The effects of the transfer shall occur from the moment of registration in the Commercial register. The Act gives a definition of the majority share, which is in principle such a share that gives the partner a minimum of fifty percent of the voting rights. The Act also gives certain exemptions of the duty to ask the tax or customs authority for the approval, e.g. if it does apply to foreign persons. In such a case this approval shall be replaced by written confirmation of a partner and the transferee that they have no duty to ask the Tax Administrator for approval.
Within this short article, we have dealt only with two issues of the new Act, though there are many other important changes with regards to tax deposit, tax security in cases of import of goods, new rules related to invoices etc. Should you have any questions we would be pleased to discuss them in more depth with you.
Gerta Sámelová Flassiková