Attorney-at-law Jaak Siim successfully represented a client in tax dispute
Partner Jaak Siim of the LEADELL Pilv Law Office successfully represented his client in a tax dispute in Tartu Administrative Court with regard to the legality of a decision made to claim a tax debt from a member of the board of a company.
The Tax and Customs Board (TCB) made a decision about the liability of the former board member of a company in amount of approximately 26,000 euro, stating that the VAT and income tax debt was caused during the time when the client was a board member and due to his intentional activities to reflect incorrect data in the tax calculations regarding the fictional transactions of purchase and sale of sugar. As a result, the payable tax obligations were incorrectly declared. Since the TCB was unable to claim from the company the debt determined by the tax decision, the decision regarding the client was made about the liability of the board member at the disputable period. The client disagreed with the decision and submitted an appeal to the administrative court.
On 5 October 2016 the Tartu Administrative Court made a decision to satisfy the appeal, annul the decision and ruled the TCB to cover the procedural costs of the client in amount of almost 4,000 euro. The court agreed with the reasoning of the appeal that in the disputable decision the intentional activities of the client to violate tax law were not convincingly proven. According to the court, based on the submitted and analysed evidences it was not possible to unambiguously conclude that the applicant was acting illegally and with the intention to violate tax law. In the worst case the activity of the client could be considered as gross negligence upon fulfilling the obligations of a board member. But since the 3-year term applicable for gross negligence had already passed by the time of making the decision, the decision was illegal and subject to be annulled.
Tax authority did not appeal the decision of the administrative court and it has entered into force by now.