Council of State says no to AADE
Court verdict rejects extension of statute of limitations from five to 10 years in tax probes
The Council of State has rejected on a technicality the extension of the statute of limitations from five to 10 years, as the tax administration had desired, which means that even if new information arises about any tax evasion six years ago it may not be utilized for many cases.
Greece’s top constitutional court refused the extension as the auditors did not comply with the terms and conditions provided for in the legislation. According to the income tax code, the extension of the statute of limitations from five to 10 years is accepted for information that comes to the knowledge of the audit mechanism from abroad to which it could not have access. However, the legislator stipulates that all administrative assistance procedures must be done before the five-year period has expired.
Specifically, in order to extend it to a decade, the Independent Authority for Tax Revenue (AADE) needed to have already submitted the relevant request or requests for mutual administrative assistance to the competent foreign authority within the time in which it must act – i.e. within five years and the data should come after the end of the five years and before the completion of a decade.
As it seems, the tax inspection mechanism did not work based on the above.
As mentioned in the decision of the Supreme Court, the tax authority, while already having information within the five-year limitation period about allegedly fake transactions of a company that appealed from the responses of foreign authorities to previous requests for mutual administrative assistance, it submitted a new request for mutual administrative assistance in time after after five years. The court decided that the information received by the tax authority in response to the new request could not justify the extension of the statute of limitations from five to 10 years.
Meanwhile, the tax administration is currently focusing on the examination of tax cases pending from 2013 and from 2018, as many of them will be beyond probing capacity at the end of this year.
