Avoidance and settlement of tax disputes

1. Avoidance and settlement of tax disputes St. Petersburg International Legal Forum 18 May 2012 in St. Petersburg Speaker: Dr. Herbert Becherer, Steuerberater (tax adviser)Vice-President of Bundessteuerberaterkammer (Federal Chamber of Tax Advisers), GermanyVice-President of the CFE

2. Avoidance and settlementof tax disputes • Principals of the tax procedure • Compliance and equality of taxation • The tax authority investigates the facts ex officio principle (investigation principle) • The taxpayer has to co-operate • (co-operation maxim) • Constitutional law prohibition on excessiveness • Right to be heard/fair hearing • Principle of the protection of legitimate expectations Principle of good faith

3. Avoidance and settlementof tax disputes • Unilateral voluntary agreement of the tax authority towards the taxpayer • Binding ruling (§ 89 General Fiscal Code) • Obtain reliable statements from tax authorities following a tax audit (§§ 204 ff. General Fiscal Code) • „Lohnsteueranrufungsauskunft“ – request for information relating to wage tax (§ 42e Income Tax Act)

4. Avoidance and settlementof tax disputes • Actual settlement • Binds tax office and taxpayer under the following conditions: • No agreement in legal questions • In cases of difficult verification of the facts, only • Cases of estimate, valuation, future-oriented forecast • No result that is clearly incorrect • The involvement of an official authorized to take decisions is required

5. Avoidance and settlementof tax disputes • Administrative appeal procedure: Appeal • Purpose and legal nature • Legal protection of the person who appeals • Self-control of the administration • Relief of tax courts

6. Avoidance and settlementof tax disputes 4. Administrative appeal procedure • Admissibility criteria for appeal • Admissibility to apply to tax authorities • Admissibility of the appeal • Right to object • Deadline • Form • Demand for legal protection

7. Avoidance and settlementof tax disputes 4. Administrative appeal procedure • Appeal, no devolutive effect = no automatic suspension (§ 367 I General Fiscal Code) • Limited suspension of the appeal (§ 361 I General Fiscal Code) • Suspension of execution (§ 361 II General Fiscal Code) • Suspension and stay of the proceedings (§ 363 General Fiscal Code)

8. Avoidance and settlementof tax disputes 4. Administrative appeal procedure • Decision on the appeal • The tax office dismisses the appeal as inadmissible • The tax office dismisses the appeal as being unfounded • Requirement for written form and reasoning • Change for the worth possible, appeal may be withdrawn before

9. Avoidance and settlementof tax disputes 4. Administrative appeal procedure • Decision on the appeal • Appeal admissible and justified in its entirety: The tax office provides help by withdrawing, modifying or cancelling – as applied – the contested administrative act. • Appeal admissible and partly justified: The tax office provides partial remedy by modifying or cancelling partly the contested administrative act.

10. Avoidance and settlementof tax disputes • Legal action • The decision on the appeal (cases a, b, d) may be litigated at the fiscal court. • Two instances in the tax courts: • Tax Court (FG: Court of First instance) • Federal Fiscal Court (BFH: Fiscal Supreme Court)

11. Thank you for your attention!