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1、Tax investigations and disputes across bordersStaying ahead in an era of heightened tax scrutinyDECEMBER 2024TAX INVESTIGATIONS AND DISPUTES ACROSS BORDERSTax investigations are on the rise and the stakes are higher than ever.Authorities across Europe and the US are ramping up scrutiny,making it ess

2、ential to be informed and prepared.Welcome to the 2025 edition of our guide to tax investigations and disputes across borders.This guide provides insights into the contentious tax landscape across Europe and the US,helping you to anticipate challenges,understand risks and respond confidently.Right n

3、ow,large-scale tax investigations and disputes are on the rise,driven by governments need to boost their revenue without increasing the tax burden on working people.As a result,tax authorities are adopting increasingly robust positions in tax audits and assessments involving large corporates a trend

4、 that we expect to continue.Sophisticated audits around transfer pricing and tax structuring are becoming more frequent,and there is heightened scrutiny of intra-group financing arrangements,executive renumeration and M&A transactions.The growing volume of taxpayer information being shared internati

5、onally means a greater risk of spillover disputes,while settlements are increasingly difficult to achieve as tax authorities become more litigious.In this context,understanding the practicalities of how tax investigations and disputes play out and what consequences they may bring is more important t

6、han ever.Businesses are increasingly recognising this as a core element of their strategic decision-making.In this guide,we answer key questions about the contentious tax framework in nine jurisdictions across Europe and the US.These questions cover topics ranging from tax authority powers to potent

7、ial criminal liability,and highlight common disputes and trends in each jurisdiction.We also provide a checklist of questions to help you gain similar insights in other jurisdictions by working with local tax advisors.We hope that this guide serves as a valuable reference for you.Should you need mor

8、e information or wish to discuss these topics in more depth,please feel free to reach out to me,my colleagues listed at the back or your usual Freshfields contact.WelcomeHelen Buchanan Head of Freshfields global tax disputes practiceT+44 20 7936 4000 E 2Contents301Austria02Belgium03France04Germany05

9、Italy06The Netherlands07Spain08United Kingdom09United States10Checklist11Contacts1.AustriaKatharina Kubik and Dominic Krenn1.What type of tax disputes are most common and are there any trends taxpayers should be aware of?Most commonly,tax disputes in Austria concern income tax,corporate tax,and valu

10、e added tax.In addition,there has been an increase in transfer pricing disputes arising from tax audits(e.g.on the arms-length nature of transactions within a group,on the classification of entities as entrepreneurs/low risk entities).Disputes as a result of reclaims of Austrian withholding tax have

11、 also increased(e.g.on refunds of Austrian withholding taxes that were granted without a legal basis).As countries increasingly use the automatic exchange of information to uncover undisclosed offshore assets or income,a number of disputes regarding hybrid mismatches,tax deductions for interest paym

12、ents and/or profit shifting are expected in the near future.In addition,the global minimum tax,which has already been introduced into Austrian law,could lead to challenges for taxpayers in the future.Taxpayers in Austria should also be aware of potential challenges arising from other developments at

13、 the OECD and EU level(e.g.developments on global mobility or rules on EU withholding tax procedures).2.What powers do the tax authorities have to require disclosure of information from taxpayers?Austrian tax authorities have broad powers to require disclosure of information from taxpayers to verify

14、 tax compliance.The tax authorities can request information and documents from taxpayers that are relevant to the assessment of taxes(e.g.financial statements,invoices,contracts,bank statements and other records).Austrian tax authorities can also conduct audits by reviewing books and records,intervi

15、ewing employees,requesting information from third parties,and inspecting premises to verify the accuracy of tax returns filed by taxpayers.The tax authorities can request access to softcopy data,including electronic records and files,as part of a tax audit or investigation.Taxpayers must provide acc

16、ess to such data if it is relevant to the assessment of taxes.In principle,the taxpayer may refuse to submit documents if they are not relevant to the proceedings or are sensitive.However,if the taxpayer wants to assert a right(e.g.deduction of business expenses),they will be factually forced to pre

17、sent all necessary documents to substantiate the existing right,which might include sensitive information.The tax authorities can conduct searches of premises if they believe that evidence of tax evasion or fraud is present.In addition,taxpayers may be subject to proactive disclosure requirements ac

18、cording to European regulations and directives.3.What are the relevant applicable time limits for tax audits/enquiries to be opened and appeals to be made?The time limit for opening a tax audit is in principle five years from the end of the year in which the tax return was filed.This time period can

19、 be extended by the Tax Office taking extension actions(e.g.enquiries to persons providing information,requests for additional information)until the absolute statute of limitation,i.e.10 years,is reached.The tax audit ends with the issuance of a(revised)tax assessment.If the taxpayer wishes to chall

20、enge the tax assessment issued by the tax authorities,they must file an appeal with the Federal Tax Court within one month from the date of receipt of the decision(although this deadline may be extended upon request if the taxpayer can credibly demonstrate a justified reason for the extension).If th

21、e taxpayer does not file an appeal within this time limit,the tax assessment becomes final and binding.4.What processes must be followed before a tax dispute reaches court?Appeals are directed at the Federal Tax Court but must be submitted to the competent Tax Office.However,filing an appeal is in p

22、rinciple not accompanied by additional disclosure requirements.The competent Tax Office will render a preliminary appeal decision in which it decides on the taxpayers appeal.If the taxpayer does not accept the preliminary appeal decision,a request for remittance of the appeal to the Federal Tax Cour

23、t must then be filed with the competent Tax Office within one month.The competent Tax Office will then have to forward the appeal to the Federal Tax Court,accompanied with a notification of remittance in which it can repeat and complete its arguments.If the taxpayer does not file a request for remit

24、tance within the time limit,the preliminary appeal decision becomes final and binding.AustriaTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS5Taxpayers are not required to pay the tax assessed by the Austrian tax authorities before they can file an appeal.However,filing an appeal does not prevent the

25、tax from becoming due.Rather,a separate application for suspension of collection must be filed for this purpose,if this is desired.The suspension is not to be granted if the appeal does not appear to be promising in the circumstances of the case,if the tax in question is not related to the taxpayers

26、 points of objection or if the conduct of the taxpayer is aimed at jeopardising the collectability of the tax.5.Which courts are relevant to tax disputes?The Austrian tax courts consists of two levels.In the first instance,the Federal Tax Court decides on the appeal.Subsequently,both the taxpayer an

27、d the competent Tax Office can file an appeal with the Supreme Administrative Court as the court of last instance within six weeks from the date of receipt of the decision.If no appeal is filed within this time limit,the decision becomes final and binding.The Supreme Constitutional Court also has ju

28、risdiction over tax matters but is only called upon in exceptional cases(e.g.questions on the validity of laws and violations of fundamental rights).Taxpayers may appeal to the Supreme Administrative Court and the Supreme Constitutional Court in parallel or combine an appeal to the Supreme Constitut

29、ional Court with a contingent application for assignment to the Supreme Administrative Court in case the Supreme Constitutional Court rejects or dismisses the appeal.The Supreme Administrative Court and Supreme Constitutional Courts as courts of last instance are obliged to refer questions on the in

30、terpretation of EU law to the Court of Justice of the European Union,while the Federal Tax Court as court of first instance is not.6.Can the tax authorities impose penalties and if so how are these calculated?The Austrian tax authorities can impose penalties for various types of violations,including

31、 both administrative and criminal penalties.Administrative penalties are typically imposed for administrative violations,such as the failure to file tax returns or pay taxes on time.These penalties vary depending on the severity of the violation and the amount of tax owed.For example,failing to file

32、 a tax return on time may result in a penalty of up to 10%of the amount of tax owed,while failing to pay taxes on time results in a penalty of up to 2%per month of the amount of tax owed.Criminal penalties,on the other hand,are imposed for more serious violations,such as tax fraud or evasion.These p

33、enalties can include fines,imprisonment,or both,depending on the severity of the offence.The level of penalty imposed will depend on several factors,including the level of wrongdoing and the amount of tax involved.For example,intentional tax fraud or evasion will generally result in higher penalties

34、 than unintentional errors or omissions.However,filling a voluntary self-disclosure can mitigate or reduce penalties.If the legal requirements for an effective voluntary disclosure are met,the tax authority generally has no discretion.7.Can taxpayers reach an out-of-court settlement with the tax aut

35、horities?Austrian tax laws do not generally provide for the possibility of settling disputes between taxpayers and tax authorities by way of an out-of-court settlement,and there are no unilateral alternative dispute resolution(ADR)options available.8.Can tax authorities impose criminal liability on

36、taxpayers?Austrian tax authorities can impose criminal liability on taxpayers who violate tax laws.Tax offences in Austria are categorised as either administrative or criminal offences.Administrative offences generally result in penalties/interest/surcharges,while criminal offences can result in fin

37、es,imprisonment,or both.Key Austrian criminal tax offences include tax evasion and tax fraud.Tax evasion involves failing to declare or pay taxes that are due.Tax fraud involves intentionally providing false information or concealing information with the intent of evading taxes.Austrian tax law also

38、 provides for vicarious liability for the criminal acts of employees.Under certain circumstances,employers can be held criminally liable for the tax offences of their employees.In practice,criminal investigations for tax offences in Austria are not standard procedure,and administrative proceedings a

39、re usually preferred.However,the tax authorities can initiate criminal proceedings if they believe that a taxpayer has committed a criminal offence.In addition,every tax audit report is shared with the fiscal criminal division within the Austrian tax authorities.AustriaTAX INVESTIGATIONS AND DISPUTE

40、S ACROSS BORDERS6AustriaTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS7Administrative and criminal proceedings are separate and,if initiated,taxpayers need to defend against both.However,there are interdependences between both proceedings and evidence gathered in one of the proceedings might be used

41、 in the other,provided there is no statutory prohibition on the use of evidence.9.How do tax authorities interact with their foreign counterparts and other agencies or authorities?Austrian tax authorities may collaborate with other Austrian government agencies,e.g.to investigate and prosecute tax of

42、fences.Austria is also an active participant in international tax cooperation measures and has signed numerous agreements with other countries relating to the(automatic)exchange of tax information and the provision of mutual assistance in relation to tax matters.This includes the Convention on Mutua

43、l Administrative Assistance in Tax Matters,which provides a framework for information exchange,joint audits,and other forms of cooperation between tax authorities.In practice,Austrian tax authorities often collaborate with their foreign counterparts on investigations and audits,particularly in cases

44、 of suspected cross-border tax evasion or avoidance.Joint audits may involve tax authorities from multiple countries working together to investigate a particular taxpayer or industry.In the event of a dispute with a foreign tax authority,Austria has mechanisms in place to resolve these issues throug

45、h Mutual Agreement Procedures(MAPs):both as per double taxation treaties and the implementation of the EU dispute resolution directive.MAPs are designed to resolve disputes between countries arising from the interpretation or application of double taxation treaties.Taxpayers who are facing a dispute

46、 with a foreign tax authority can request assistance from the Austrian tax authorities to initiate a MAP.MAPs may continue into arbitration proceedings.10.Is there anything else taxpayers should know about taking a tax dispute to court?Oral hearings before the Federal Tax Court and the Supreme Admin

47、istrative Court are typically held publicly.While decisions of the Supreme Administrative Court must be published online,decisions of the Federal Tax Court do not necessarily have to be published online.In both cases the taxpayers name is not disclosed(i.e.any publication is done anonymously).The li

48、kely timeline for tax disputes can vary depending on the complexity of the case and the workload of the relevant court and/or judge,but in general terms it can take several months to several years for a case to be resolved.Proceedings before the Federal Tax Court are generally free of charge and tax

49、payers can represent themselves(although this is very uncommon for corporate taxpayers).In addition,taxpayers(individuals as well as legal persons)may apply for legal aid which includes free representation.In proceedings before the Supreme Administrative Court taxpayers must be represented by a tax

50、advisor/auditor or an attorney,and in proceedings before the Supreme Constitutional Courts they can only be represented by an attorney.Additionally,a submission fee of currently EUR 240 must be paid in proceedings before both courts.However,the losing party shall reimburse the winning party up to fi

51、xed(rather insignificant)amounts determined by law(if the winning party requested cost reimbursement in the appeal).In addition,taxpayers may apply for legal aid which includes free representation.BelgiumNikolaas Van Robbroeck,Maxim Wuyts and Alessandro Vullo2.1.What type of tax disputes are most co

52、mmon and are there any trends taxpayers should be aware of?Tackling all sorts of tax optimisation structures through the application of the general anti-avoidance rule(GAAR)is a recurring topic of interest for the Belgian Tax Authority(BTA).Even though an efficient Belgian advance tax ruling practic

53、e is able to provide taxpayers with prior legal certainty regarding the application of the GAAR,the number of tax disputes reaching court remains relatively high.In recent years,there has also been a particular trend of the BTA auditing and challenging the application of dividend and/or interest wit

54、hholding tax exemptions and reductions in cross-border group structures involving interposed holding companies that the BTA may consider as conduit companies following recent case law from the European Court of Justice(the so-called Danish cases on beneficial ownership and tax abuse).In addition,the

55、 special transfer pricing investigation unit of the BTA has become more active,and increasingly staffed with skilled tax inspectors,in recent years.It carries out a large number of routine transfer pricing audits every year which are followed,in some cases,by in-depth audits often leading to signifi

56、cant tax reassessments.Generally,the BTA often also focuses on particular target areas,such as:the application of the Belgian salary withholding tax exemption for R&D and compliance with required formalities;the use of tax-exempt provisions,irregular use of carried-forward tax losses,and incurring e

57、xceptional costs of a considerable amount;companies with abnormal turnover compared to similar companies,or an abnormal evolution of such turnover;the application of the Belgian participation exemption and rules giving deductions for dividends received;the application of withholding tax exemptions a

58、nd reductions in light of beneficial ownership and substance requirements;tax-neutral restructurings;and the application of the reformed CFC legislation.(Until 2018/2019,these target areas were formally publicly announced;more recently,they have instead been identified from practical experience,leak

59、ed internal communications within the BTA and/or comments made by the BTA to groups of taxpayers benefitting from certain tax regimes).Complex tax legislation,increasing tax compliance requirements and an often somewhat aggressive stance by the BTA means we expect taxpayers will continue to face tax

60、 challenges in Belgian in the years ahead.2.What powers do the tax authorities have to require disclosure of information from taxpayers?A tax audit generally begins with a written request for information by the BTA.Any document or information considered relevant to the tax audit can be requested by

61、the authorities.The data requested should in principle be provided by the taxpayer within one month,although this is a deadline which can be extended for legitimate reasons,such as a large amount of information being requested.In recent years,it has become normal for a routine tax audit to start wit

62、h a request by the BTA for a full set of accounting documents regarding the audited period in digital form.The taxpayer is also required to allow the BTA entry into its business premises to inspect the activities being carried out and the documents and records located there,even if such inspection w

63、as not announced in advance.The BTA is increasingly making use of this power,including for relatively limited tax audits.If access is not granted by the taxpayer,the BTA cannot force entry into the taxpayers premises,but the taxpayer can be fined by the BTA or sanctioned with penalty payments.If suc

64、h premises are(at least partly)inhabited,the BTA needs permission from a judge to request entry.In case of tax-related criminal offences(generally tax fraud),officials can force entry into the taxpayers business and/or personal premises on the basis of a search warrant issued by the investigating ju

65、dge,although in such case the investigation is led by the public prosecutor instead of the BTA.The BTA also has powers to request relevant information from third parties(such as clients or suppliers)for checking a taxpayers tax position.Certain limitations and specific procedural requirements apply

66、for information requests to certain types of third parties,such as parties subject to professional secrecy(most notably lawyers)or banking secrecy(broadly,financial institutions),although the latter can be set aside if certain procedural requirements are met.BelgiumTAX INVESTIGATIONS AND DISPUTES AC

67、ROSS BORDERS9If the taxpayer or third party does not comply with the aforementioned requests made by the BTA,the BTA can impose administrative fines.In addition,a recent law allows the BTA to request a judge imposes penalty payments(dwangsom/astreinte)in order to enforce cooperation with a tax inves

68、tigation(including compliance with information requests).Taxpayers are not required to proactively disclose to the BTA if they take a position in their tax returns which is uncertain,but such disclosure could limit penalties should a reassessment be made in the future.Certain other specific disclosu

69、re requirements must however be complied with in Belgian tax returns,such as the disclosure of payments made to tax havens.The BTA also receives disclosure from,or about,taxpayers under the various mandatory disclosure regimes applicable in Belgium including Country-by-Country Reporting(CbCR),the Co

70、mmon Reporting Standard(CRS),FATCA and DAC6.The BTA has introduced a Co-Operative Tax Compliance Programme(CTCP),giving an option for very large companies and groups to enter into a collaborative approach with the BTA to improve tax compliance via legitimate expectations,transparency and faster lega

71、l certainty.Companies wanting to make use of CTCP must have in place,among other things,a robust internal tax risk management and control system (a tax control framework).(Large companies that do not meet the criteria to be considered as very large can also make use of the CTCP if they meet the othe

72、r requirements for participation in the CTCP.)Companies making use of CTCP are able to benefit from a tailored audit strategy,a single point of contact at the BTA,and an improved tax reputation.Although the CTCP remains relatively new,Belgian companies may increasingly see their use of CTCP as formi

73、ng part of their corporate social responsibility efforts.3.What are the relevant applicable time limits for tax audits/enquiries to be opened and appeals to be made?In general,the BTA can open an enquiry into a personal or corporate income tax return within three years of the first day of the releva

74、nt assessment year.The BTA can make a tax assessment within that same period for tax that should have been assessed but has not been due to an incorrect tax return.Extended investigation and assessment periods apply in specific cases:four years for tax returns that are filed late or are not filed;si

75、x years in case of:transfer pricing investigations for companies subject to international reporting obligations;companies having made payments to tax havens;companies having applied for an exemption or waiver from,or reduction in the rate of,withholding taxes based on a double tax treaty or EU Direc

76、tive;companies having applied foreign tax credits to reduce the Belgian tax payable;or the BTA having obtained information from foreign authorities in relation to the tax return under DAC6 or DAC7 reporting requirements;and 10 years in case of:tax fraud(provided the BTA notifies the taxpayer of its

77、intention to apply this extended period where fraud is suspected);or so-called complex tax returns,involving the presence of hybrid mismatches,the application of CFC rules or the presence of reportable legal constructions(the latter for purposes of the so-called Cayman Tax).As a result,the statutory

78、 retention period for accounting and tax records has also been extended to 10 years.In relation to withholding taxes,an additional specific assessment period of five years applies.For VAT,the standard investigation and assessment period is three years,extended to four years for VAT returns that are

79、filed late or are not filed.A 10-year investigation and assessment period applies in case of fraud related to VAT matters.Different deadlines apply to other taxes,such as regional taxes and miscellaneous taxes.In relation to income tax matters,taxpayers have one year from the third business day foll

80、owing the date on which a tax assessment notice was sent to initiate an administrative appeal before the Regional Director of Taxes(see question four).In relation to VAT matters,the administrative appeal procedure is not regulated by law,but in practice the BTA allows taxpayers to initiate an admini

81、strative appeal within three months of the third business day following the date on which a VAT assessment was sent.BelgiumTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS10BelgiumTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS114.What processes must be followed before a tax dispute reaches court?Taxpa

82、yers are able to challenge in court any tax assessment by the BTA(including in relation to interest and/or penalties).In relation to income tax matters,an administrative appeal must first be lodged before the Regional Director of Taxes.Such administrative appeal must be initiated within one year of

83、the third business day following the date on which the tax assessment notice was sent.The taxpayer has three months from the notification of a decision in an administrative appeal to lodge a judicial appeal before the court.In the absence of an administrative decision within six months as from the l

84、odging of the administrative appeal,the taxpayer may lodge an appeal before the court.The above administrative appeal requirement does not apply in relation to VAT matters,meaning that taxpayers are able to immediately challenge a VAT assessment in court.Different rules apply to other taxes,such as

85、regional taxes.There is no pay-to-play rule in relation to taxes in Belgium,such that the payment of a disputed tax is not required in order for a taxpayer to challenge it in court.Except for in exceptional circumstances,the recovery of the disputed tax shall be suspended during the appeal process,a

86、lthough taxpayers should take into account that interest on unpaid taxes continues to accrue during the(often lengthy)legal proceedings.If taxpayers want to bring a constitutional law challenge against a tax law,a request for annulment before the Belgian Constitutional Court should generally be intr

87、oduced within six months of the publication date of such law.5.Which courts are relevant to tax disputes?Most tax disputes are heard initially before the civil section of the Court of First Instance.The decisions of the Court of First Instance can be appealed to the Court of Appeal;and Court of Appe

88、al decisions can be appealed to the Belgian Supreme Court purely on points of law(although generally only a minority of Court of Appeal decisions are appealed to the Supreme Court).Criminal tax cases can generally be brought before the Criminal Court by the public prosecutor.Decisions of the Crimina

89、l Court can be appealed to the Court of Appeal,followed by the Belgian Supreme Court.If taxpayers want to bring a constitutional law challenge against a tax law,a request for annulment should be introduced before the Belgian Constitutional Court.If questions on the constitutionality or EU-law compli

90、ance of a national tax provision are raised before other courts,such courts may also decide to refer such question(s)to either the Constitutional Court or the European Court of Justice for a preliminary ruling.Certain local taxes(i.e.taxes introduced by Belgian municipalities or provinces)should be

91、challenged before the Belgian Council of State.6.Can the tax authorities impose penalties and if so how are these calculated?Civil(administrative)tax penalties can be imposed by the BTA for each violation by the taxpayer of its obligations under Belgian tax law.Such penalties can consist of:administ

92、rative fines generally ranging from EUR 50 to EUR 1,250(with higher fines applying in case of specific violations,including of transfer pricing reporting obligations,reporting obligations in relation to foreign bank accounts and legal constructions,and DAC6 and DAC7 reporting obligations);and/or in

93、case of tax returns filed late or not filed,or in case of incomplete or incorrect tax returns,a tax increase calculated as a percentage of the income that has not been declared or has been declared late(see below).If a tax increase of at least 10%has been applied in the case of undeclared income or

94、income declared late,the reassessed amount constitutes a minimum tax base against which(with very few exceptions)no deductions or losses can be offset.In its judgment of 21 November 2024,the Belgian Constitutional Court did not consider this rule unconstitutional in the case of an ex officio assessm

95、ent whereby a 10%tax increase had been imposed,although the Court emphasised that such 10%tax increases cannot be imposed for a first violation by a taxpayer without the intent to commit tax fraud.Following this judgment,the Minister of Finance has announced that the BTA shall no longer automaticall

96、y impose a 10%tax increase for first violations by taxpayers acting in good faith.The above-mentioned tax increases range from 10%to 200%,with the applicable percentage generally depending on (i)whether or not the taxpayer had the intention to evade taxes,BelgiumTAX INVESTIGATIONS AND DISPUTES ACROS

97、S BORDERS12(ii)the number of violations already committed by the taxpayer,and(iii)whether the taxpayer has made use of false or forged documents or has tried to bribe tax officials.Where the taxpayer has acted in good faith(i.e.the violation has been caused by circumstances outside of the taxpayers

98、control),no tax increase is imposed.In practice,when discussions with the BTA concern a matter of principle(i.e.the interpretation of tax law)that has not yet been settled in case law or administrative practice,the BTA also generally agrees not to impose a tax increase.This generally leads to the fo

99、llowing range of potential tax increases:Taxpayer acting in good faith (ie the violation has been caused by circumstances outside of the taxpayers control)NoneNo deliberate intent to evade taxes First violation10%increaseSecond violation20%increaseThird violation30%increaseFourth violation onwardsCo

100、nsidered deliberate(see scales below)Deliberate intent to evade taxes First violation50%increaseSecond violation100%increaseThird violation onwards200%increaseDeliberate intent to evade taxes paired with false or forged documents or(attempted)bribery of tax officials200%increaseSimilar penalties app

101、ly for taxes other than income taxes.A separate request for a reduction or waiver of the aforementioned administrative penalties and/or late payment interest can be introduced before a specific service within the BTA,which may at their discretion be granted in exceptional circumstances(equity reason

102、s).7.Can taxpayers reach an out-of-court settlement with the tax authorities?It is quite common that civil tax disputes are terminated before they reach court,with the BTA agreeing to a full or partial cancellation of the tax assessment.It is also possible to reach an agreement with the BTA during c

103、ourt proceedings,which agreement may be endorsed in an enforceable judgment.The length(and cost)of court proceedings in Belgium is often an element taken into account by taxpayers when deciding to pursue an acceptable settlement.A Tax Mediation Service(TMS)is available as an independent service of w

104、hich taxpayers can make use to try and resolve a dispute with the BTA,after an administrative appeal has been initiated but before the dispute reaches court.After such mediation,the TMS issues a non-binding mediation report that can serve as a basis for a subsequent decision by the BTA on the matter

105、.In criminal tax-related cases,a settlement may be proposed by the public prosecutor(or the taxpayer can request the public prosecutor to propose a settlement).It will be a condition of such settlement that the full amount of evaded taxes(including any late payment interest)is paid and that the BTA

106、agrees with the settlement.8.Can tax authorities impose criminal liability on taxpayers?Criminal penalties can only be imposed by a criminal judge,following the prosecution of the taxpayer before the criminal court.Prosecutions are generally brought by the public prosecutor,and never by the BTA.Spec

107、ific criminal penalties may be imposed on taxpayers if a criminally sanctioned offence is committed as part of a violation of tax law.Such criminally sanctioned offences generally include tax fraud(i.e.a violation of tax law with fraudulent intent)and/or the use of false or forged documents.For tax

108、fraud,a prison sentence of eight days to two years and/or a criminal fine ranging from EUR 250 to EUR 500,000 can be imposed.In case of serious(organised)tax fraud,the prison sentence can be up to five years.For the use of false or forged documents to commit tax fraud,a prison sentence of one month

109、to five years and/or a criminal fine ranging from EUR 250 to EUR 500,000 can be imposed.BelgiumTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS13Such criminal penalties may be imposed in parallel to any civil(administrative)penalties imposed by the BTA(see question six).In determining the criminal pen

110、alty,the criminal judge should however take into account the amount of these civil penalties to ensure that the taxpayer is overall not subject to an unreasonably heavy penalty.Although BTA officials generally have the obligation to notify the public prosecutors office of criminally sanctioned offen

111、ces discovered as part of their investigation,a criminal prosecution in tax matters(i.e.by the public prosecutor)is in practice generally reserved for the most serious cases of tax fraud (for example,where large amounts of tax has been evaded).9.How do tax authorities interact with their foreign cou

112、nterparts and other agencies or authorities?The BTA works together with a number of other Belgian authorities,including the social security services,the public prosecutors office,the police forces and the National Bank of Belgium.Similarly,the BTA increasingly works together with foreign tax authori

113、ties.Belgium has an extensive network of(tax)information exchange agreements(both itself and within the context of the EU)and double taxation treaties,and is part of the OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters.Joint audits with foreign tax au

114、thorities are possible under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters,and a new framework for such joint audits within the EU has been introduced as part of DAC7(implemented and taking effect in Belgium as from 1 January 2023),meaning that officials of a foreign

115、 tax authority can take part in a tax audit in Belgium(with the permission of the BTA)or the other way around.Disputes between the BTA and foreign tax authorities do arise,particularly in the context of double taxation treaties.Such disputes are resolved under the Mutual Agreement Procedure(MAP)prov

116、ided for in such treaties.In 2022,453 MAP cases were started in Belgium.10.Is there anything else taxpayers should know about taking a tax dispute to court?Tax litigation both civil and criminal-can take a number of years to reach a definitive conclusion,particularly if the case is appealed to the C

117、ourt of Appeal or Supreme Court and/or legal questions are referred to the Constitutional Court or the Court of Justice of the European Union.Full recovery of costs is highly unlikely:if the dispute is won by the taxpayer,the relevant court generally grants the taxpayer an indemnity for the cost of

118、legal proceedings,but such indemnity is determined by law on a lump-sum basis and is generally lower than the legal costs actually incurred by the taxpayer.In theory,taxpayers can represent themselves at all levels of court proceedings,except before the Belgian Supreme Court.In practice,however,taxp

119、ayers are mostly represented by a lawyer.The BTA can be represented by a tax official or a lawyer(although the former is only common in smaller disputes).Taxpayers should be aware that,in the absence of exceptional circumstances,proceedings are public and decisions are published and publicly availab

120、le.FranceCyril Valentin,Edouard Laperriere and Louis-Antoine Jacquet3.1.What type of tax disputes are most common and are there any trends taxpayers should be aware of?Tackling tax avoidance has been a major focus of the French tax authorities(FTA)for some time now and we expect that to continue to

121、be the case for the foreseeable future.There is a trend towards challenging cross-border structures which erode the French tax base.Current challenges concern notably:structures involving foreign holding entities lacking economic substance,transfers of intangible assets,commissionaire/agent/service

122、provider structures,undisclosed French permanent establishments(tablissements stables occultes),and eligibility to double tax treaty(DTT)-based foreign tax credits.The FTA continue to rely on traditional tools,such as transfer pricing,the general anti-abuse rule(GAAR)and the beneficial ownership req

123、uirements under French DTTs.In addition,the tools available to the FTA have been increasing,with the introduction of two new anti-abuse rules by the Finance Act for 2019,both relying on a principal purpose test(PPT),as well as new PPT clauses in French DTTs following the entry into force of the OECD

124、s multilateral instrument.The risk of criminal prosecution for tax offences and tax fraud has been increasing in recent years,due notably to the entry into force of the Act#2018-898 of 23 October 2018 (the Anti-Fraud Act),pursuant to which the FTA have now the obligation to automatically forward mat

125、ters to the public prosecutor in cases where the amount of the reassessed taxes exceeds EUR 100,000 and the FTA applied one of the heaviest tax penalties.Equity trading by financial institutions is under particular scrutiny in France at the moment,with a number of ongoing audits focusing on the with

126、holding tax treatment of French source dividend equivalent payments(manufactured dividends)paid under stocks loans and derivatives,in which the FTA allege that French banks have carried out CumCum/abusive dividend arbitrage transactions.While these dividend equivalent payments have historically not

127、been subject to withholding tax,the FTA are now taking the position that withholding tax should apply,in the same way as it does to French source portfolio dividends.In this context,five French banks were subject to raids by the financial public prosecutor(Parquet national financier)at the end of Ma

128、rch 2023 as criminal investigations have also been opened for aggravated tax fraud laundering and aggravated tax fraud.Finally,we have also seen the FTA focusing on traditional areas of controversy such as VAT(notably in the financial sector),tax deductibility(especially of financial expenses),the u

129、se of reliefs(notably tax credits,such as the research tax credit(crdit dimpt recherche)and valuations.We expect that large multinational groups will continue to face challenges from the FTA in the areas of controversy mentioned above,as well as increasing risks of criminal investigations.Multinatio

130、nal taxpayers should be aware that tax authorities increasingly look at what their counterparts are doing:an audit or assessment in one jurisdiction could easily spill over to another if similar structures have been used across the group.Taxpayers should,more than ever,be alert to challenges affecti

131、ng their peers that have the potential to become sector-wide issues.2.What powers do the tax authorities have to require disclosure of information from taxpayers?The FTA may use non-binding or binding information requests to obtain the disclosure of information or documents relating to a taxpayers s

132、ituation,either from the taxpayer directly or from a third party that may hold useful information relating to the taxpayers situation(e.g.banks,suppliers and social security services).The scope of information and documents the FTA may request,although broad,is circumscribed by law.Third parties cann

133、ot use professional secrecy/privilege as a justification not to answer the requests of the FTA.Failure to answer the FTAs binding requests may lead to the application of an estimated assessment procedure(taxation doffice)and/or a fine for the taxpayer.The FTA may also obtain information and document

134、s from a taxpayer in the frame of a formal tax audit(vrification de comptabilit(for legal entities)or examen contradictoire de la situation fiscale personnelle(for individuals).In case of suspected tax-related criminal offences,the FTA have the ability to conduct dawn raids(visites et saisies),subje

135、ct to the prior authorisation of a judge,to enter and search premises and seize documents capable of evidencing the relevant criminal offence.Such authorisation is granted by a judge upon request from the FTA,where there are reasonable grounds for believing that a taxpayer is avoiding the payment or

136、 assessment of taxes by making purchases or sales without invoices,by using or issuing invoices or documents that do not relate to actual transactions,or by deliberately failing to make bookkeeping entries.Dawn raids are commonly used for undisclosed permanent establishment and transfer pricing matt

137、ers.FranceTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS15To combat international fraud and tax avoidance,the FTA have the ability to conduct interviews of persons,other than the relevant taxpayer(e.g.clients,suppliers,service providers,employees and former employees)capable of holding information a

138、bout the existence of a fraudulent scheme.DAC6 has introduced obligations on French taxpayers,intermediaries and their advisers to proactively report details of certain cross-border arrangements to the FTA,where such arrangements meet at least one of certain hallmarks.Under certain of the hallmarks,

139、arrangements are only reportable if they also meet a tax advantage main benefit test.Since 2017,certain companies belonging to multinational groups are required to disclose information to the FTA,under the mandatory Country-by-Country Reporting(CbCR),including,for each tax jurisdiction in which the

140、multinational group does business,the turnover,the profit before tax,the income tax paid and accrued and the number of employees.The information disclosed under the CbCR is not public,but new public CbCR reporting requirements apply for financial years beginning on or after 22 June 2024.3.What are t

141、he relevant applicable time limits for tax audits/enquiries to be opened and appeals to be made?Applicable limitation periods vary depending on the taxes concerned,amongst other things.As far as corporate income tax and individual income tax are concerned,the FTA are in principle able to issue a rea

142、ssessment notice until the end of the third year following the year in relation to which the tax was originally due,subject to extensions in specified circumstances.Longer limitation periods apply,inter alia:(i)in case of undisclosed activity;(ii)where certain reporting obligations have not been com

143、plied with;(iii)in case of tax flagrancy;(iv)in case of tax fraud having led to a complaint from the FTA;or(v)in case the FTA activate an exchange of information procedure between tax authorities.As far as VAT is concerned,the FTA are in principle able to issue a reassessment notice until the end of

144、 the third year following the year during which the VAT has become payable.The FTA may challenge withholding taxes until the end of the third year following the year in relation to which the tax was due,subject to extensions in specified circumstances.The issuance of a tax reassessment notice by the

145、 FTA following an audit interrupts the applicable limitation period.Its notification opens a new limitation period of the same length as the initial limitation period.The FTA must initiate the collection of the reassessed amount before the expiry of the new limitation period.Before launching proceed

146、ings in the tax courts,the taxpayer must first file a reclaim with the FTA.In most cases,reclaims may be filed until 31 December of the second year following the year(as applicable):i.during which the tax was collected or the tax collection notice was notified;or ii.during which the tax was paid,whe

147、re no collection occurred/no collection notice was issued;or iii.during which the event motivating the reclaim occurred.Where the reclaim follows a reassessment by the FTA,the taxpayer benefits from the same time limit as the FTA to file a reclaim,starting from the date of the notification of the ta

148、x reassessment notice.In principle,the FTA must respond to the taxpayers reclaim within six months from the filing of the reclaim,subject to an up to three-month extension.Absent any response after that period,the FTA are considered to have implicitly rejected the reclaim.Subsequently,depending on t

149、he taxes concerned,the taxpayer may submit the dispute to the administrative courts or to the judicial courts.Generally domestic taxpayers have two months,and foreign taxpayers have four months,from the receipt of a rejection letter from the FTA(or once a reclaim is considered as implicitly rejected

150、 by the FTA)to submit the dispute to the competent court of first instance.4.What processes must be followed before a tax dispute reaches court?Where the tax dispute does not stem from a reassessment of the taxpayer,the process is as follows:the taxpayer files a reclaim with the FTA,the reclaim is e

151、xamined by the FTA,and if the reclaim is rejected explicitly or implicitly(i.e.no answer within the applicable time limit),the matter can be referred to the lower court.FranceTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS16FranceTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS17Where the tax dispute s

152、tems from an initial reassessment of the taxpayer by the FTA,the process before reaching the tax courts may be longer as a result of the taxpayer having the right to provide written observations on the tax reassessment notice which the FTA must respond to(if they reject them).In some cases,the taxpa

153、yer may request a hierarchical appeal,to discuss the case with more senior representatives of the FTA,or request that the case be submitted to specific commissions,both of which also extend the time frames.In both scenarios,the taxpayer is required to pay the tax due before filing a reclaim.It may r

154、equest the payment obligation be suspended,and collateral must be provided to the FTA for this request to be granted.Where a court of first instance decides against the taxpayer,this ends the suspension period,even if the taxpayer appeals the decision.5.Which courts are relevant to tax disputes?The

155、administrative courts are competent for most tax matters(i.e.tribunal administratif(lower administrative tax court),cour administrative dappel(administrative court of appeal),and Conseil dEtat(supreme court of the administrative order).The judicial courts are competent for disputes relating to stamp

156、 duties,wealth tax,indirect contributions and assimilated taxes(i.e.tribunal judiciaire(lower court),cour dappel(court of appeal),and Cour de cassation(supreme court of the judicial order).Criminal courts are competent for criminal cases involving tax related offences(i.e.tribunal correctionnel(lowe

157、r court),cour dappel(court of appeal),and Cour de cassation(supreme court of the judicial order).Lower courts and courts of appeal decide on the merits of the cases,based on the facts they sovereignly assess and on the rules applicable to the cases.The supreme courts do not decide on the merits of t

158、he cases,but on whether the rules of law have been correctly applied.The judicial review procedure(recours pour excs de pouvoir)may be used in certain instances to refer a matter of law to the Conseil dEtat directly.Taxpayers may challenge the constitutionality of French legislation.Such challenges

159、are submitted to the French constitutional court(Conseil cons titutionnel),and decisions cannot be appealed by taxpayers.6.Can the tax authorities impose penalties and if so how are these calculated?The FTA can impose civil tax penalties as a result of:the failure to file a tax return within the app

160、licable time limit,calculated as a percentage of the amount of the tax due,as follows:10%in the absence of any formal notice issued by the FTA or if the return is filed within 30 days following the receipt of such formal notice;40%where the return is not filed within 30 days following the receipt of

161、 the formal notice;or 80%in case of an hidden activity;inaccuracies or omissions in tax returns or documents including information necessary to compute a tax due,or the fact for a taxpayer to unduly obtain from the FTA a refund which is not due,calculated as a percentage of the tax due,as follows:40

162、%in case of wilful misconduct(manquement dlibr);80%in case of abuse of law(decreased to 40%where the taxpayer was not the main beneficiary of the abuse or did not have the initiative);or 80%in case of fraudulent manoeuvres;and a delay in the payment of taxes,calculated as a percentage of the amount

163、of tax due,as follows:10%in case of delay in the payment of income tax,social security contributions,wealth tax,local taxes;or 5%in case of delay in the payment of other taxes,including corporate income tax,VAT and stamp duties.Several other penalties apply in specific situations.Tax penalties may b

164、e mitigated in the context of certain settlement procedures(see question seven).7.Can taxpayers reach an out-of-court settlement with the tax authorities?Several out-of-court settlement procedures are available to the taxpayers.These include:(i)the tax transaction(transaction fiscale);(ii)the overal

165、l settlement(rglement densemble);and(iii)the convention judiciaire dintrt public(CJIP)for criminal cases involving tax fraud.FranceTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS18Data made public by the FTA show that the number of tax transactions and overall settlements entered into by the FTA has

166、increased significantly between 2019 and 2023.The number of CJIPs concerning tax fraud cases remain low,due to the more exceptional nature of this type of cases,but is also increasing.Under a tax transaction,only penalties may be mitigated.Both the taxpayer and the FTA commit not to litigate the cas

167、e,once the transaction is concluded.Overall settlements usually concern complex matters,the legal analysis of which is uncertain.Both the principal of the tax and the penalties may be mitigated through such settlements.From the FTAs perspective,they aim at accelerating the treatment of the case,impr

168、oving tax collection and limiting litigation risk.The taxpayer must commit not to litigate the case,but(in principle)such commitment is not binding on the taxpayer,contrary to what is provided for a tax transaction.The CJIP is a type of deferred prosecution agreement entered into with the public pro

169、secutor.A CJIP has the effect of extinguishing the public prosecution if the taxpayer complies with certain obligations.These obligations,which may be alternative or cumulative,may consist of:the payment of a public interest fine to the French Treasury,the amount of which may not exceed 30%of the av

170、erage annual turnover of the company(computed based on the last three turnovers known for the company);the implementation,under supervision,of a program to bring the taxpayers anti-corruption and prevention procedures into compliance,for a maximum period of three years;and/or the compensation of the

171、 victims damages,if any.The CJIP must be submitted to,and approved by,a judge.A specific settlement procedure is also available to the taxpayers via the corporate compliance department created in 2019(Service de Mise en Conformit Fiscale;SMEC).The SMEC can be approached on a voluntary basis by the t

172、axpayer in order to disclose certain specific tax matters (e.g.to disclose an undeclared activity carried out in France characterising a permanent establishment;to disclose any transaction likely to be subject to certain higher tax penalties).In return,the taxpayer may benefit from a reduction in th

173、e applicable penalties and default interest,if the following requirements are met:the taxpayer approaches the SMEC spontaneously before any investigation or audit is started by the FTA or any other administrative or judicial authority;any remediation involves paying all French taxes due;and the situ

174、ation for which remediation is sought is cured after the procedure.In addition to the reduction of penalties,an important benefit of this remediation procedure is that it may allow the taxpayer to avoid the automatic referral of the case to the French public prosecutor.8.Can tax authorities impose c

175、riminal liability on taxpayers?Key tax-related criminal offences include:(i)tax fraud offence and assimilated offences(e.g.omissions of accounting entries or inclusion of book entries which are false or fictitious);(ii)complicity in tax fraud offence;and,(iii)laundering of tax fraud(blanchiment de f

176、raude fiscale)(i.e.facilitating by any means the false justification of the origin of the property/assets or income of the perpetrator of a tax fraud offence which has provided to such perpetrator a direct or indirect benefit).Tax fraud is characterised where a taxpayer has fraudulently avoided(or h

177、as attempted to fraudulently avoid)the establishment or the payment of all or part of any tax provided in the French tax code,by deliberately omitting to file its tax return within the set time limits,or deliberately concealing part of taxable sums,or having organised its own insolvency or obstructi

178、ng by other means the collection of tax,or by acting in any other fraudulent ways.Taxpayers found guilty of tax fraud are liable for five years imprisonment and a fine of EUR 500 000,which can be raised up to twice(or,in the case of corporates,ten times)the income derived from the commission of the

179、offence.The criminal penalties may be increased when specified aggravating circumstances exist.Both companies and individuals(employees/de jure or de facto representatives/directors/managers)may be subject to criminal investigation and prosecution for tax fraud or laundering offences.The FTA may not

180、 prosecute taxpayers for tax-related criminal offences.Prosecution is initiated by the public prosecutor.FranceTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS19The Anti-Fraud Act provides for an obligation on the FTA to automatically forward a matter to the public prosecutor in cases where the amount

181、 of the reassessed taxes exceeds EUR 100,000 and the FTA applied one of the higher tax penalties,i.e.:the 100%penalty for opposition to a tax audit;the 80%penalty for hidden activity,abuse of law,fraudulent practices,illicit activity,concealment of prices,non-declaration of foreign accounts;or the 4

182、0%penalty for non-filing a tax return within 30 days from a formal notice or the 40%penalty for wilful misconduct or abuse of law if during the six previous calendar years,the taxpayer had,during a previous audit,one of the penalties listed above assessed against it or had been the subject of a comp

183、laint from the FTA for tax fraud.The public prosecutor is then responsible for deciding whether or not to initiate criminal proceedings.Pursuant to established case law of the Cour de cassation,tax and criminal proceedings are independent.This means that in principle,a criminal court does not have t

184、o wait for the decision of a tax court on a case,to decide on the case,and the decision of the tax court has not the force of res judicata vis-vis the criminal court.There is an exception to the latter principle,where a tax court decides in a final decision on substantive grounds that the relevant t

185、axpayer is not liable for the disputed tax;in such case,the taxpayer cannot be found guilty of tax fraud.Case law of the European Court of Human Rights,the French constitutional court,the Cour de cassation and the Court of Justice of the European Union has imposed limitations on when tax and crimina

186、l penalties may be combined in the same matter,but many practical questions remain open at this stage.9.How do tax authorities interact with their foreign counterparts and other agencies or authorities?The FTA do interact and cooperate with other French authorities and agencies,and in particular wit

187、h judicial authorities and social security organisations to combat fraud.The judicial authorities and social security organisations transmit information to the FTA spontaneously or upon request.The FTA also increasingly cooperate with their foreign counterparts.There is extensive information sharing

188、 between the FTA and foreign tax authorities,under tax information exchange agreements,DTTs,the OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the DAC directives.Exchange of information with foreign tax authorities may occur automatically,upon r

189、equest or,in certain instances,spontaneously.Joint investigations with foreign authorities may occur,although this is not yet commonplace.Disputes between the FTA and their foreign counterparts do arise,particularly in the context of DTTs.Most French DTTs provide for the Mutual Agreement Procedure(M

190、AP)to be used in such circumstances.At the end of 2021,more than 800 MAP cases were still being processed,mostly in relation to transfer pricing matters,with resolution taking an average 25 months for transfer pricing matters and 18 months for the other cases.10.Is there anything else taxpayers shou

191、ld know about taking a tax dispute to court?Except in very exceptional circumstances,proceedings are public and decisions are published and publicly available (either on an official website or in tax publications),although the name of the concerned taxpayer may be removed in order to anonymise the d

192、ecision.Memorandums summarising the arguments of each party,which are exchanged between the parties before a hearing takes place,are not public.Litigating against the FTA is generally a lengthy process,taking a number of years to reach a conclusion this varies,but tax proceedings may take around sev

193、en years from the reclaim until the decision of the Conseil dEtat(i.e.about two years before reaching the courts,and then about five years before the courts).Even where the taxpayer prevails,the taxpayer usually does not recover the entirety of the costs(including in particular legal fees)incurred d

194、uring the proceedings.This is because in practice,French courts tend to cap at very low amounts the reimbursements granted to the prevailing party in this respect.Each court has its own rules regarding representation.In most cases,taxpayers must be represented by an attorney-at-law(advocat).Before t

195、he Conseil dEtat and Cour de cassation,the taxpayer must generally be represented by an accredited attorney-at-law(avocat aux Conseils).GermanyPhilipp Redeker and Elena Mnster4.1.What type of tax disputes are most common and are there any trends taxpayers should be aware of?Tackling tax avoidance ha

196、s been a major focus of the German tax authorities(GTA)for some time now and we expect that to continue to be the case for the foreseeable future.There is a particular trend towards challenging cross-border structures which erode the German tax base.Many of the current challenges in this space relat

197、e to transfer pricing and CFC tax rules.Going forward we expect to see more cases involving anti-hybrid mismatch rules.In the large business context specifically,we have also seen GTA focusing on other areas of controversy,such as tax provisions,tax deductibility,the use of reliefs,valuations,corpor

198、ate tax residence,VAT and wage taxes.The complexity of these areas of tax law and practice,taken together with rules requiring the disclosure of transactional tax structures,means we expect large multinational groups will continue to face challenges from GTA.In responding to challenges,it is more im

199、portant than ever to have a strong handle on the evidence.GTA will always insist on testing the evidence for itself and increasingly is threatening penalties or even criminal sanctions against corporate taxpayers who it feels are defending the indefensible.2.What powers do the tax authorities have t

200、o require disclosure of information from taxpayers?GTA investigate the legal and factual circumstances,which are significant for taxation,ex officio.The taxpayer is,however,obliged to cooperate and must disclose all facts relevant for taxation.GTA may at their reasonable discretion request informati

201、on or documents from the taxpayer or third parties(including employees and financial institutions).Documents include,for example,books,records and business papers,as well as soft copy data.GTA may at their reasonable discretion also enter and inspect(but not force entry or search)business premises.I

202、f the taxpayer or third party does not provide the required information,GTA may instigate coercive measures,including imposing fines of up to EUR 25,000.They may also ask the taxpayer to provide an affidavit confirming the information provided is correct.Furthermore,penalties may arise in the contex

203、t of late filing of tax returns or tax audits(see question six).In practice,the right of GTA to issue assessment notices based on an estimated tax basis is the most common and effective enforcement measure.The tax authorities may in particular apply such an estimate where the taxpayer breaches his o

204、bligations to cooperate,or where the taxpayer cannot furnish accounts or records which she or he is obliged under tax laws to store.Experience shows that such estimates are generally higher than the actual tax liabilities.In principle,taxpayers have no right to refuse to cooperate in taxation procee

205、dings.In particular,they cannot rely on concepts of bank,business or trade secrets to refuse disclosure.Given the very limited rights to refuse disclosure of information,GTA are bound to strict tax secrecy requirements.Certain third parties,including close relatives and advisers with professional pr

206、ivilege(including lawyers and tax consultants),have a right to refuse to furnish GTA with certain information and documents.GTA also receive disclosure from,or about,taxpayers under the mandatory disclosure regimes which exist under German law including Country-by-Country Reporting(CbCR),the Common

207、Reporting Standard(CRS),FATCA,DAC6 and DAC7.Generally,German tax law requires greater cooperation in the clarification of facts for international tax cases.In the context of criminal investigations,GTA have additional powers under criminal law in addition to their tax investigation powers.These powe

208、rs include the examination of witnesses,the seizure of documents and the judicially-approved search of premises.Pressure and coercive means from a tax investigation procedure may not,however,be used in the context of a criminal procedure.3.What are the relevant applicable time limits for tax audits/

209、enquiries to be opened and appeals to be made?The general limitation period for the review of tax returns and the issuing of tax assessment notices is one year for excise duties and four years for other taxes.This period commences at the earlier of:(a)the end of the calendar year in which the releva

210、nt return was filed,or(b)three years following the end of the calendar year in which the tax liability has arisen.This period is extended to five years where taxes have been recklessly understated and 10 years in the case of intentional tax evasion.In certain cases,such as in the case of a tax audit

211、,the assessment limitation period is suspended.GermanyTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS21In principle,a tax assessment notice can be changed within the limitation period if this is permitted by legal provisions(so-called correction provisions).GTA may,however,issue tax assessment notice

212、s subject to review.The review can take place any time within the above-mentioned periods.For VAT,wage tax and capital gains tax self-assessment tax returns are required.These usually qualify as tax assessment notices subject to review.Anyone who claims to be aggrieved by a tax administrative act in

213、 particular,by a tax assessment has until one month after receipt of the relevant notice to file an administrative appeal.The time limit for filing an appeal against the final decision in the administrative procedure is also one month(see question four).4.What processes must be followed before a tax

214、 dispute reaches court?Unless the relevant GTA agrees to a direct court challenge,the taxpayer must complete an internal administrative appeal procedure before challenging in court an administrative decision of the relevant GTA to impose tax,interest or penalties.The appeal has to be submitted with

215、the tax office whose administrative act is being disputed.If the taxpayer is not remedied in full by the tax offices decision,the taxpayer can file a judicial appeal with the tax courts within one month of that decision.Neither the filing of an administrative appeal before GTA nor of a legal action

216、before court suspends an obligation to pay the taxes due under the challenged tax assessment notice.The taxpayer can,however,apply for a suspension of payment.The GTA or the court(as applicable)shall grant such suspension where there are serious doubts as regards the legality of the challenged admin

217、istrative action(e.g.the tax assessment notice)or if its execution would cause unreasonable hardship to the taxpayer and is not justified by an overriding public interest.Generally,when considering such an application,the courts apply a summary assessment of the prospects of success of the case,and

218、in practice this can lead to a de facto pre-determination of the case.Because of this,and as suspended tax payments bear interest,taxpayers should carefully consider applying for a suspension of payment.The tax court investigates the facts of a case ex officio.The taxpayer is obliged to cooperate an

219、d provide information and,upon request,books,records,business papers and other documents.In practice,the tax courts obligation to conduct its own investigation is reduced to a minimum and it mostly relies on the facts,evidence and arguments brought forward by the parties.In addition to the evidence

220、submitted by the parties,the tax court may take a visual inspection,hear witnesses,experts and participants,or refer to documents.All authorities are obliged to disclose documents and files of third parties to the tax court while maintaining the tax secrecy of third parties.5.Which courts are releva

221、nt to tax disputes?In Germany,the tax courts have jurisdiction to hear tax disputes.The judgments of the tax courts are subject to appeal to the Federal Tax Court(FTC).The tax courts are the only courts with the jurisdiction to decide on the facts of the case;the FTC only decides on:(a)questions of

222、law on the basis of the facts adopted by the tax court,or(b)questions of procedural defects.The decision of the tax court can be appealed to the FTC if this has been expressly admitted in the judgment of the tax court or if the FTC has admitted the appeal after a non-admission complaint.Such an appe

223、al must be filed within one month after notification of the decision of the tax court at the FTC.A constitutional complaint against a decision of the FTC may be filed with the Federal Constitutional Court if the taxpayer is of the opinion that the decision violates national constitutional law.Furthe

224、rmore,both the tax courts and the FTC may bring a case to the Federal Constitutional Court if they consider a tax code provision in dispute to be unconstitutional.Where European law is involved in a case,any of the courts may refer questions of interpretation to the European Court of Justice.6.Can t

225、he tax authorities impose penalties and if so how are these calculated?Civil tax penalties may be imposed on taxpayers as a result of certain breaches of their obligations.A taxpayer who fails to comply with the obligation to file a tax return,or fails to do so on time,may be subject to a late-filin

226、g penalty.The same is true for the late payment of taxes.GTA may also impose coercive fines upon a taxpayer for breaching other obligations(e.g.obligations to provide requested information).The late-filing penalty is 0.25%of the assessed tax less the sum of assessed prepayments and withheld taxes to

227、 be credited,for each month or part of a month that a return is late,subject to a EUR 25 minimum for each month or part of a month.The total penalty is,in principle,capped at EUR 25,000 except for late real estate transfer tax notification where no cap applies.GermanyTAX INVESTIGATIONS AND DISPUTES

228、ACROSS BORDERS22GermanyTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS23The late-payment penalty is 1%of the overdue tax liability per month,with late payment by a partial month triggering the late-payment penalty for the entire month.Notices ordering the payment of a penalty are subject to appeal an

229、d can be contested in court.Late-filing penalties may be challenged if the taxpayer demonstrates that the delay was excusable.GTA also allow for a waiver of late-payment penalties if such penalties would pose an undue hardship on the taxpayer.From 2025,penalties may be imposed during tax audits if r

230、equested documents and information are not provided in time.For each day of delay(up to 150 days),EUR 75 will be charged(i.e.up to EUR 11,250).In addition,in cases of repeated delays or exceptional solvency of the auditee,GTA may request a surcharge of up to EUR 25,000(i.e.up to EUR 3.75 million).GT

231、A already assume exceptional solvency if the audit periods include sales revenues of EUR 12 million or EUR 120 million if the company is part of a consolidated group.7.Can taxpayers reach an out-of-court settlement with the tax authorities?As GTA are strictly bound to apply codified law,settlements

232、are generally not permissible in tax matters although certain limited exceptions exist.The most important such limitation is that agreements on tax-relevant facts and circumstances are permissible if such facts and circumstance cannot be investigated or can only be investigated with difficulty.In or

233、der to avoid a future dispute,the taxpayer may file an advance binding ruling request asking for confirmation of the tax treatment of certain facts and measures by the tax office.In addition,under the law implementing the EU directive on tax dispute resolution and under applicable tax treaties,alter

234、native dispute resolution mechanisms are available for cross-border disputes,such as Advance Pricing Agreements(APAs)or Mutual Agreement Procedures(MAP).8.Can tax authorities impose criminal liability on taxpayers?The key criminal offence in Germany is tax evasion which is punishable with a monetary

235、 fine or up to five years(or,in severe cases,10 years)imprisonment.Custodial sentences require an individual to have intentionally provided GTA with incorrect or incomplete information about tax-relevant facts or failed to inform GTA about tax-relevant facts when obliged to do so (in particular,omit

236、ted or delayed tax returns),and,as a result,evaded taxes or obtained unjustified tax advantages for either him or herself,or for another(natural or legal)person.There is a voluntary disclosure programme that protects against criminal liability as long as no notice of a field tax audit or prosecution

237、 has been given and the offence has not yet been detected.However,voluntary disclosure under this programme has to meet strict requirements in order to be valid.Companies and business entities are not liable to criminal prosecution,but they can be subject to a monetary fine if lead personnel of such

238、 companies have committed an offence.However,as the legal representatives of a company are personally liable for the companys tax compliance,they may face criminal prosecution.If the tax evasion is committed by gross negligence instead of intent,it is categorised as a misdemeanour,carrying a fine of

239、 up to EUR 50,000.Several other criminal and misdemeanour tax offences also exist(e.g.endangering of withholding obligations,obstruction of tax and smuggling).Criminal and misdemeanour offences are prosecuted by the public prosecutors office and specialised departments in the tax offices and are hea

240、rd by the criminal courts,not the tax courts.9.How do tax authorities interact with their foreign counterparts and other agencies or authorities?Within Germany,all authorities(i.e.administrative authorities and courts)cooperate with each other by providing administrative assistance.The assistance ca

241、n be provided following requests or automatically without an explicit request(e.g.where authorities or courts(but also broadcasting companies,notaries,credit institutions,insurance companies and asset managers)become aware of circumstances relevant for taxation,in which case they have to make a cont

242、rol notification to GTA).In addition,administrative assistance and cooperation exists at international level under tax treaties and,most importantly,the laws implementing DAC6.GermanyTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS24Disputes between the GTA and its foreign counterparts do arise,partic

243、ularly in the context of double taxation treaties.Most such agreements provide for a MAP.In 2022,724 MAP cases were started with German involvement with resolution taking an average of 20 months.The contracting states may also agree on the abstract interpretation of certain treaty provisions if lega

244、l uncertainties between the treaty states arise.However,the German courts carefully review these agreements.10.Is there anything else taxpayers should know about taking a tax dispute to court?Tax court trial hearings are,in principle,public.However,the court may exclude the public to preserve tax se

245、crecy;it has to exclude the public at the request of the taxpayer who does not need to provide any reasons for such request.GTA may not request to exclude the public.From experience,tax proceedings are likely to take two to three years to finish each stage.Proceedings before the tax court trigger co

246、urt fees plus ancillary costs(e.g.witness expenses)and,in most cases,counsel fees.If and to the extent the taxpayer succeeds in court,court fees are fully compensated.The fees for the taxpayers counsel are compensated at amounts calculated on the basis of the value in dispute in accordance with stat

247、utory rules.Such compensation may be lower than the fees owed under fee agreements with counsel.The cost and expenses of GTA do not have to be borne by the taxpayer if she or he is not successful.Before the first instance tax courts,the taxpayer may lodge the lawsuit him or herself.Professional repr

248、esentation(e.g.by attorneys or certified tax advisers)is permissible and generally advisable at all levels,but is only mandatory for disputes filed with the FTC.ItalyRenato Paternollo and Alessia Mandelli5.1.What type of tax disputes are most common and are there any trends taxpayers should be aware

249、 of?The Italian Tax Authority(ITA)has quite an aggressive approach when auditing banks and multinational companies.In our experience,the ITA is frequently challenging the following fact-patterns:hidden Italian Permanent Establishments(PE):the ITA often challenges the existence of an Italian hidden P

250、E of a foreign company in cases where an Italian entity provides sales support services to the foreign company or where the foreign company acts in Italy through a representative office.In such a case,the ITA typically attributes to the PE a portion of the profits generated by the Italian sales of t

251、he foreign company.Similar PE challenges are raised by the ITA in cases where employees of a foreign company regularly travel to Italy and,when in Italy,carry out business on behalf of that company;challenges on the application of the withholding tax exemption under the Interest and Royalties Direct

252、ive(IRD)or under the Parent Subsidiary Directive(PSD):the ITA usually challenges the application of the IRD and the PSD in cases where the recipient of the income(interest or dividend)is not considered under Italian law to be the beneficial owner of the relevant income and instead distributes it to

253、foreign investors which could not themselves benefit from the IRD or PSD;challenges relating to transfer pricing,particularly in relation to multinational groups;and abusive transactions:the ITA frequently challenges cross-border transactions on the basis of the Italian general anti abuse law.There

254、is also a trend of the ITA bringing innovative challenges against multinational companies within the technology sector,such as in relation to the application of withholding tax on deemed royalties and the application of withholding tax on short-term rentals in the hands of online rental platforms.Go

255、ing forward we expect to see an increase in challenges involving the anti-hybrid mismatch rules.2.What powers do the tax authorities have to require disclosure of information from taxpayers?The ITA and the Italian Tax Police(ITP)have the power to request taxpayers to deliver:(i)books and records tha

256、t taxpayers must keep available for review for 10 years pursuant to the Italian corporate laws;and(ii)other documents which are accessible to the taxpayer from Italy(including if held in servers or clouds outside of Italy),such as communications to clients for marketing purposes,internal corporate p

257、apers and internal communications within the company.Taxpayers have no right to redact or withhold privileged documents.Failure to deliver the documents requested by the ITA/ITP triggers a tax penalty and the documents not delivered to the ITA/ITP cannot be relied upon by the taxpayer in the subsequ

258、ent stages of the tax dispute.These document requests are usually put forward on a formal basis on the first day of a tax audit.The ITA and the ITP often make dawn raids when starting a tax audit.During a tax audit,employees must give the required credentials and passwords to the ITA/ITP on request

259、to allow the ITA/ITP to access the information sought.The ITA and the ITP also have the power to interview such employees during a tax audit.The ITA also receives disclosure from,or about,taxpayers under the mandatory disclosure regimes which exist under Italian law,including Country-by-Country Repo

260、rting,the Common Reporting Standard,FATCA and DAC6.The ITA is permitted to access and rely on documents collected by the ITP in the context of criminal proceedings.Likewise,documents collected by the ITA in the context of tax audits can be used by the ITP in criminal proceedings.3.What are the relev

261、ant applicable time limits for tax audits/enquiries to be opened and appeals to be made?The statute of limitation under Italian tax law for the ITA to issue a tax assessment relating to corporate income tax,regional tax or VAT is:(i)six years in case of an unfaithful tax return(for example,the 2019

262、tax year can be assessed until year-end 2025);(ii)eight years in case of an omitted tax return(for example,the 2019 tax year can be assessed until year-end 2027.The rules have recently changed:now,before issuing a tax assessment,the ITA must send to the taxpayer a draft-tax assessment.After the noti

263、fication,the taxpayer may alternatively(i)apply for the settlement procedure within 30 days,or(ii)file a defence brief within 60 days explaining to the ITA why the relevant challenge is unfounded.(In the latter case,a settlement procedure could still be pursued after the formal notification of the t

264、ax assessment is received.)Under either option,if a settlement is not reached between the parties in the timeframe set out by these new rules,the taxpayer can file a tax appeal in front of the first level tax court.Different deadlines apply in respect of different taxes.For example,for stamp duty it

265、 is generally three years from the relevant payment date and for registration tax it is generally either two,three or 10 years from the relevant payment date.ItalyTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS264.What processes must be followed before a tax dispute reaches court?Taxpayers can challe

266、nge in front of the Italian tax court(TC)tax assessments in which the ITA requests taxes,interest and/or penalties.As set out under the reply to question three,following the notification of a tax assessment and before starting tax litigation,the taxpayer can enter without prejudice into a settlement

267、 procedure with the ITA.If no settlement is reached,and a litigation starts in front of the TC,the appeal must be first sent to the ITA and then notified to the TC.When starting tax litigation,the taxpayer must pay in advance one-third of the additional tax and interest as set out in the assessment.

268、This interim payment will be refunded(plus interest thereon)should the TC rule in favour of the taxpayer.It is possible to request that the TC suspend this interim collection,by proving that the interim payment,even if then refunded,would create a serious financial damage to the taxpayer.The TC are

269、often reluctant to grant such suspension when the request is filed by banks,large multinational or insurance companies.5.Which courts are relevant to tax disputes?Under Italian law,tax litigation involves up to three levels of judgment:first level TC,second level TC and Supreme Court.An appeal in fr

270、ont of the Supreme Court can be filed against the decision of the second level TC,but only on the basis of legal principles.The Supreme Court cannot rule on the factual aspects of a case.TC do not have the jurisdiction to hear criminal cases,which are handled by the criminal courts instead.6.Can the

271、 tax authorities impose penalties and if so how are these calculated?Civil tax penalties are applied by the ITA.The amount of such penalties varies depending upon the relevant violations.In general terms,for corporate income taxes,regional taxes and VAT violations,penalties are equal to:70%of the ad

272、ditional taxes in case of an unfaithful tax return;and 120%of the requested taxes in case of an omitted tax return.Generally speaking,under a tax settlement,penalties are usually reduced to one-third.It is rare that the ITA disapply penalties.To do so,there must be specific circumstances to warrant

273、this,such as the fact that the taxpayer relied in good faith on certain clarifications issued by the ITA that then have been changed.7.Can taxpayers reach an out-of-court settlement with the tax authorities?Yes,as anticipated at question three,a tax settlement can be reached with the ITA before ente

274、ring into litigation(including before a formal notification of a tax assessment following the closure of a tax audit).Settlement generally reduces tax penalties payable to one-third.In the context of a settlement procedure,the taxpayer may suggest factual circumstances and/or legal aspects which may

275、 lead to a reduction of the tax claim.A settlement does not entail the acknowledgment by the taxpayer of any violation or the acceptance of the arguments put forward by the ITA,and it is normally justified by the need to avoid the costs,delays and uncertainty of tax litigation.In Italy,it is increas

276、ingly common for large corporations to settle the tax claims raised by the ITA rather than to engage in litigation in front of the TC.The outcome of tax litigation is unpredictable in Italy and the TC often issues decisions which are not correctly grounded,and companies often prefer to avoid facing

277、the risk and uncertainties of such tax litigation.A settlement can also be reached whilst tax litigation is pending.In such cases,different rules would apply with respect to the determination of applicable penalties,with a less favourable reduction available.8.Can tax authorities impose criminal lia

278、bility on taxpayers?There are various Italian criminal offences deriving from tax violations.If,in the context of a tax audit,the ITA or the ITP believe that a criminal offence has occurred,they will inform the public prosecutor accordingly which will in turn start a criminal investigation into the

279、matter.In such a case,it is very common that the administrative audit and the criminal investigation continue on a parallel basis.Usually,a tax settlement is reached with the ITA to mitigate the possible criminal exposure on the matter(in addition to the other benefits discussed at question seven).T

280、his is often important for the taxpayer in terms of reputational risk.ItalyTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS27ItalyTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS289.How do tax authorities interact with their foreign counterparts and other agencies or authorities?A tax audit can be carri

281、ed out by both the ITA and the ITP.If an audit is carried out by the ITP alone,the ITA will subsequently work together with the ITP before issuing a tax assessment in relation to the matter.The ITA and the ITP can coordinate with the public prosecutor in cases in which the tax violation potentially

282、also amounts to a criminal offence.In addition to the above,we are increasingly seeing the ITA interact with tax authorities outside of Italy.Moreover,there is extensive information sharing between the ITA and its foreign counterparts including under Tax Information Exchange Agreements,double taxati

283、on treaties and the OECD Convention on Mutual Administrative Assistance in Tax Matters.Disputes between Italy and its foreign counterparts do arise,particularly in the context of double taxation treaties.The Mutual Agreement Procedure(MAP)could be used in such circumstances.However,it must be noted

284、that the MAP is quite a long procedure.For disputes between Italy and other EU Member States,the EUs Directive on tax dispute resolution mechanisms may be more effective.10.Is there anything else taxpayers should know about taking a tax dispute to court?Tax litigation in Italy may take in excess of

285、10 years to reach a conclusion.If the TC rules in favour of the taxpayer,it could rule that the ITA must pay the taxpayers legal fees.In such a case,however,the TC would normally determine the taxpayers legal fees as a lump sum which is often a fraction of actual costs incurred in the litigation.Tax

286、 appeals are normally heard in front of the TC in a public hearing.6.The NetherlandsEelco van der Stok and Rutger Bouma1.What type of tax disputes are most common and are there any trends taxpayers should be aware of?The Dutch Tax Authorities(DTA)are increasingly focusing on transfer pricing issues.

287、This is particularly the case in the context of restructurings,where for example the DTA may levy an exit charge for the removal of certain assets from the Dutch tax net in case of a corporate migration.Transfer pricing investigations can also arise in the context of the conversion of the business(e

288、.g.from full-fledged entrepreneur into a contract manufacturer).In recent years,the DTA have started investigating,and sometimes challenging,transfer pricing even where an Advance Pricing Agreement(APA)has been concluded.Other common tax disputes in the Netherlands relate to dividend withholding tax

289、 and reclaims thereof,and the deductibility of interest.The latter is of particular relevance in private equity acquisitions.Furthermore,management incentive plans(MIPs)regularly lead to discussions,and sometimes disputes,with the DTA,including with respect to the economic value of the investment(an

290、d where applicable,the unwinding of their previous investment).The DTA have also announced that as of 2025 they will recommence actively evaluating the employment relationship between perceived freelancers and their clients in order to assess whether that relationship constitutes employment for wage

291、 tax purposes.This might result in an increase in tax disputes concerning freelancers on the payroll and cases of pseudo self-employment.2.What powers do the tax authorities have to require disclosure of information from taxpayers?The DTA may require taxpayers to disclose information in several ways

292、.Every taxpayer has to provide the DTA,upon request,with all data and information that may be relevant to any taxpayers tax position.There is no exception for commercially sensitive information.Information requests may also be directed to third parties that possess relevant information regarding a s

293、pecific taxpayer.In such a case,legal privilege may prevent privileged information from being shared with the DTA(although only lawyers registered with the Bar Advocaten have formal privilege and are therefore not obliged to provide the information in question).Witnesses and experts may also be requ

294、ested to disclose certain information.Experts are in principle not required to comply with this request whereas witnesses are.Information requests may extend to,amongst other things,invoices,the calendar of business appointments,bank statements,travel documents and(digital)correspondence (i.e.emails

295、 and voice call records).However,under the nemo tenetur principle enshrined in Dutch law,a taxpayer is not required to cooperate in its own prosecution and thus the DTA may not request information that can only be relevant for determining the amount of a penalty or fine(with certain exceptions,for e

296、xample with respect to already existing,factual materials).In addition,an exemption from providing requested information may apply to information that the taxpayer does not and cannot reasonably possess.Failure to comply with the information request may result in(i)a penalty and/or(ii)the burden of

297、proof as to the incorrectness of the assessment shifting to the taxpayer.The DTA is authorised to conduct tax investigations through dawn raids,in which case the taxpayer is obliged to grant the DTA access to all relevant parts of the premises it uses.Other disclosure rules also exist.For example,ta

298、xpayers may be required to provide information to the DTA under DAC6,Country-by-Country Reporting(CbCR),the Common Reporting Standard(CRS)and FATCA.3.What are the relevant applicable time limits for tax audits/enquiries to be opened and appeals to be made?For Dutch return and assessment based taxes,

299、a taxpayer must file a tax return within four months(in respect of personal income tax)or five months(in respect of corporate income tax)of the end of the respective fiscal year.The DTA has three years from the end of the fiscal year covered by the tax return to review it and issue a tax assessment.

300、If a taxpayer has been granted a filing deferral,the deferral period is added to the three years(or in certain cases five or 12 years see question 4).Taxes levied on the basis of self-assessment(such as VAT and payroll taxes)are formalised and payable once the taxpayer has filed the return.This must

301、 generally be done within one month of the end of the period covered by the return.The NetherlandsTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS30Additional tax assessments may be imposed within five years of the end of the relevant fiscal year,but only if(i)the DTA has discovered a new fact,(ii)the

302、 taxpayer has acted in bad faith or(iii)the DTA has made an obvious mistake(such as a clear typo).If the underpaid tax relates to foreign capital or income,this period is extended to twelve years.A taxpayer may object to a tax assessment(or other formal DTA decision)within six weeks(see question fou

303、r).Both the objection and the appeal may be filed pro forma,meaning that the grounds of the objection or appeal may be submitted four to six weeks after the official six-week deadline.After this period has lapsed the taxpayer may still submit a so-called request for reduction with the DTA up to five

304、 years after the end of the respective fiscal year.The DTA will then assess whether this request should be granted as it would do in the case of a formal objection(although the decision of the DTA in such case is non-appealable).4.What processes must be followed before a tax dispute reaches court?Pr

305、ior to a Dutch court ruling on a formal DTA decision(e.g.a tax assessment or a penalty),the taxpayer must first object to that decision with the DTA(see question three above).The decision has to be reviewed by a tax inspector who was not involved in issuing the initial decision,unless the taxpayer r

306、equests otherwise.The taxpayer can appeal the DTAs decision on its objection before the relevant tax court within six weeks of its issuance.During an objection process with the DTA,the taxpayer has the right to be heard and,if it exercises this right,it is entitled to access all documents pertaining

307、 to its case.With respect to decisions appealed in court,the DTA is obliged to submit all relevant documents to the respective court.In general,there is no disclosure obligation on the taxpayer.There is no pay-to-play rule in the Netherlands:if a taxpayer objects to an assessment or appeals a DTA de

308、cision on an objection,a payment deferral is generally granted.Deferred amounts are subject to interest.5.Which courts are relevant to tax disputes?Only tax chambers of general courts can rule on tax cases.Both the taxpayer and the DTA may appeal a general court ruling to the Court of Appeal where t

309、he rules,procedures and timelines are similar to those of the general courts.Decisions of the Court of Appeal can be appealed before the Supreme Court,although the Supreme Court only rules on the application of the law and not on questions of fact.All courts may,and the Supreme Court must,refer ques

310、tions regarding the interpretation of unclear EU law to the Court of Justice of the European Union.Lower Courts can also refer prejudicial questions to the Supreme Court.6.Can the tax authorities impose penalties and if so how are these calculated?The DTA may impose default penalties(in cases of neg

311、ligence)and punitive fines(in cases of gross negligence or intent).A default penalty is imposed on taxpayers for not(timely)requesting a tax return form,not(timely)filing a tax return,submitting an incomplete or incorrect tax return or not paying tax within the applicable deadline.The standard penal

312、ty for not(timely)filing a tax return is a fixed amount,which may increase in the event of repeated defaults.The standard penalty for not paying the tax within the applicable deadline is proportional to the amount of tax owed.In cases of gross negligence or intent,a punitive fine of up to 100%of the

313、 tax due may be imposed.The fine may be higher if the DTA has previously imposed a punitive fine on the taxpayer or if the taxpayer has committed fraud.The default penalties and punitive fines imposed by the DTA are administrative(and therefore not criminal)fines,against which the taxpayer can lodge

314、 an objection with the court.Not filing correct returns and not paying tax may also be criminal offences.If a taxpayer has committed a criminal offence,the DTA has the authority to impose a criminal fine or refer the case to the public prosecutor.(See question eight.)7.Can taxpayers reach an out-of-

315、court settlement with the tax authorities?Disputes between a taxpayer and the DTA may be resolved by way of settlement,which may be preceded by mediation.Settlements are generally used to resolve disputes over factual issues,but may also concern the application of law to a specific case.Penalties or

316、 interest cannot be subject to a settlement.Settlements are not public and cannot be used by other taxpayers to obtain a similar position.TAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS31The NetherlandsTAX INVESTIGATIONS AND DISPUTES ACROSS BORDERS328.Can tax authorities impose criminal liability on

317、taxpayers?Taxpayers may be criminally prosecuted for offences involving tax fraud or other non-tax specific offences(e.g.,forgery,deceit,money laundering,being part of a criminal organisation)by the Public Prosecution Service(often following a referral from the DTA).If it is determined that a legal

318、person has committed,or is an accessory to,a criminal offence,the de facto managers or principals may also be criminally prosecuted.This may occur if the criminal conduct resulted from the actions of these persons or if they failed to take measures to prevent the criminal conduct.If an employee comm

319、its a criminal tax offence and ignores instructions from their manager or principal to alter their behaviour,the principal will be vicariously liable for these acts if they were aware that they were being committed.Dutch law enshrines the una via principle,according to which a taxpayer may not be pr

320、osecuted and penalised twice for the same offence(e.g.through both a criminal and administrative penalty).Thus,a taxpayers offence must be addressed either through criminal law or through administrative proceedings.To this end,the DTA may work with the tax investigation and audit service(FIOD)and th

321、e Public Prosecution Service to decide how a case should proceed.9.How do tax authorities interact with their foreign counterparts and other agencies or authorities?The DTA cooperates with a number of national agencies (both private and public parties)in the joint enforcement of governmental regulat

322、ions and the exchange of information(to the extent permitted by law).In tax fraud investigations,the DTA is assisted by FIOD.As a basic matter,the DTA may not disclose any information about a taxpayer.The Netherlands is,however,party to a number of international agreements that override this duty of

323、 confidentiality.The most important examples of such agreements are bilateral tax treaties and Tax Information Exchange Agreements that contain information exchange provisions based on Article 26 of the OECD Model Convention.In addition,information may be(and in practice is)exchanged with foreign au

324、thorities under a number of OECD conventions and EU directives/regulations that the Netherlands has implemented via the Dutch International Tax Assistance Act(Wet op de Internationale Bijstandsverlening).In cross-border situations,the DTA may face disputes with its foreign counterparts in relation t

325、o the tax position of taxpayers.Under most bilateral tax treaties,the DTA may initiate a Mutual Agreement Procedure(MAP)to resolve such disputes.10.Is there anything else taxpayers should know about taking a tax dispute to court?Proceedings before the tax courts are not public,unless(and to the exte

326、nt that)they involve a penalty.Not all tax court decisions are published,and published cases are anonymised.The respective taxpayer may be defended by a lawyer or other representative,but this is not required(except for pleadings before the Supreme Court).On appeal or defence,the taxpayer may claim

327、that in case the court rules in its favour the DTA be ordered to pay the costs of the proceedings.Such an order for costs,however,is determined on the basis of fixed sums and will often not result in full reimbursement of the costs incurred.The taxpayer itself may be ordered to pay the costs of the

328、proceedings only if it has made a manifestly unreasonable use of procedural law.Litigation with the DTA may take several years to reach a conclusion,especially if the case is brought before the Court of Appeal or the Supreme Court.The Netherlands7.SpainBosco Montejo,lvaro Fernndez and Carmen Delgado

329、1.What type of tax disputes are most common and are there any trends taxpayers should be aware of?In our experience,and noting the General Tax Control Plan published yearly by the Spanish tax authorities which identifies the areas in which tax auditors will focus their reviews,the Spanish tax author

330、ities have recently been concentrating their tax audits on several key areas.Non-residents:tax auditors have been scrutinising payments to,and capital gains obtained by,non-residents,particularly in relation to private equity fund structures involving tax havens or holding structures.The tax authori

331、ties will likely focus the tax audits on the withholding agents,particularly where there are multiple non-resident taxpayers involved.Corporate tax:more traditional corporate tax issues(such as the deductibility of cross-border intra-group acquisition debt,transfer and valuation of intangible assets

332、,tax credits requirements,transactions/expenses that may be disguised as(non-deductible)dividends,and transfer pricing)continue to be closely examined.Individuals:individuals are actively being investigated for issues relating to tax residency,the fraudulent use of legal entities to hide income or a

333、void taxation,and the recharacterisation of carried interest structures as employment income.The tax authorities are also interested in analysing economic/business reasons behind reorganisations subject to the roll-over regime.Indirect taxes:in this respect,the tax authorities have a specific focus on the payment of transfer tax on the sale of leased property.These areas of focus are expected to c