December 2013
Draft law on a new tax complaint structure relating to tax matters
The Danish Parliament has adopted a new proposal to amend the tax complaint structure. The changes to the current complaints structure will take effect from 1 January 2014. The new structure means that the taxpayer now has only one appeal body before the courts. Therefore, the taxpayer should choose wisely which body to appeal to. It may therefore be even more important in the future to seek advice when appealing against SKAT's decisions.
1. Current Complaint Structure
If SKAT has taken a decision that it wishes to appeal against, the taxpayer has the opportunity to appeal to the Tax Appeals Board. If the taxpayer wishes to appeal the decision of the Tax Appeals Board, it is possible to subsequently appeal to the National Tax Court. Thus, there are two options for redress in the administrative system before the taxpayer is forced to bring the matter before the courts in the event of a continuing disagreement. It does not cost SKAT any fee to complain to the Tax Appeals Board, but it costs DKK 1.200 to file a complaint with the National Tax Court, which is reimbursed if upheld to a large extent.
SKAT has the possibility to refer a decision taken by one of the tax appeal boards to the Tax Board if the decision is manifestly unlawful. By this is meant if the decision is contrary to current legislation. In that case, the Tax Council may take a different decision.
Thus, both the taxpayer and the SKAT have two options for bringing the case.
2. New complaint structure in tax cases
The new complaint structure creates a unified administrative complaint body within the tax area called the Tax Appeals Administration. The National Tax Court, as well as the tax appeals boards, will both still prevail. It will cost DKK 1.200 to appeal SKAT's decisions, regardless of whether it is appealed to the National Tax Court or to a tax appeals board. Citizens who wish to appeal against a decision of SKAT are free to choose whether they wish to appeal to a Tax Appeals Board or to the National Tax Court.
2.1 Citizens' right to appeal in tax cases
As a result of the formation of a single appeal body from 1 January 2014, the taxpayer will only have the opportunity to appeal once before a case goes to court. It is therefore essential to make an assessment of which body would be best to appeal to in the given case. As far as possible, it is necessary to avoid having to take the case to court, as this can be costly in lawyer and court fees.
There is no change in the cost recovery rules. It will therefore still be possible to recover costs by 50% regardless of whether the case is won or lost. If the citizen has been fully or substantially satisfied at the decision of the case, the remaining 50% shall also be covered. However, companies cannot obtain cost recovery but can only deduct expenses from taxable income.
2.2 The possibilities of SKAT in the tax sector
Whereas in the future the taxpayer will only have a right of appeal, SKAT will maintain the possibility of bringing the case twice. Thus, SKAT has an additional lifeline here, and thus there is a distortion of legal certainty in the tax system. The residual safety, as in recent times, has already been the subject of sharp criticism.
SKAT retains the right to refer a decision of the Land Tax Court or one of the tax appeal boards to the Tax Council. However, it only applies in cases where it is found that the decision is “unlawful” and contravenes rules or established practice. Thus, although not all cases can be brought, there is still a distortion in residual certainty.
3. Entry into force
The new rules will come into force from January 1, 2014. Thus, decisions taken by SKAT after 1 January 2014 can therefore only be appealed once in the administrative system.
4. SkatteInform's comments
SkatteInform is satisfied that the citizen has the freedom to choose between whether they want to complain to the National Tax Court or to a Tax Appeals Board. This option was not included in the original proposal.
However, we do not consider it appropriate for rules to be made which would lead to a distortion of residual safety. In the past, there have also been examples of skewing - for example, reopening deadlines. Previously, the Tax Authorities had a longer reopening period than citizens had. This distortion was abolished, as it is not appropriate for the parties to have different deadlines. It seems strange, therefore, to reintroduce rules which give different conditions to the parties. We can only call for this difference to be abolished.
We provide qualified answers to your tax questions. If you are interested, we are happy to assist you in appealing decisions. We can assist you in the administrative system. In the vast majority of cases, it can be a good investment to have a counsellor help you through a complaint. If more importantly, it may prove to be when the new rules come into force. As citizens, under the new rules, as you know, there is only one trial before the courts.
Call us by phone 33 32 10 10 or send us an email at info@skatteinform.dk.
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