Insights
VAT
Incorrect VAT Advance Returns
Submitting incorrect VAT advance returns (UVA) constitutes tax evasion even if a correct VAT annual return should later have been filed.
In principle, entrepreneurs must submit a VAT advance return to the tax office, in which they have to calculate the VAT payable for the reporting period or the excess attributable to the reporting period themselves. In this case the VAT is not initially assessed by notice, but is calculated and paid by the entrepreneur. A tax reduction is effected when tax credits are claimed wrongly or excessively, for example by deducting incorrect input tax amounts.
Excessive input tax
Recently the Administrative Court (Verwaltungsgerichtshof, VwGH) dealt with this issue in a decision. The case originated from a lawyer who submitted a VAT advance return in which she claimed excessive input tax. The tax office pointed this out, after which she declared that she had not been able to submit a correct VAT advance return. Rather, the correction would be made with the VAT annual return. The tax administration then assumed a tax reduction and initiated a fiscal criminal proceeding.
The VwGH later held that it does not preclude tax evasion when input tax wrongly claimed is to be corrected in the course of the VAT annual return. For tax evasion it is sufficient that there is a temporary acquisition of a tax advantage. If, at the point when the tax is due to the tax creditor, the correct amount is not received, a tax reduction occurs, even if this may later be balanced out.
Note
The filing of incorrect VAT advance returns can also lead to criminal tax consequences even for minor errors. It is therefore worthwhile to obtain comprehensive advice beforehand.
Excessive input tax
Recently the Administrative Court (Verwaltungsgerichtshof, VwGH) dealt with this issue in a decision. The case originated from a lawyer who submitted a VAT advance return in which she claimed excessive input tax. The tax office pointed this out, after which she declared that she had not been able to submit a correct VAT advance return. Rather, the correction would be made with the VAT annual return. The tax administration then assumed a tax reduction and initiated a fiscal criminal proceeding.
The VwGH later held that it does not preclude tax evasion when input tax wrongly claimed is to be corrected in the course of the VAT annual return. For tax evasion it is sufficient that there is a temporary acquisition of a tax advantage. If, at the point when the tax is due to the tax creditor, the correct amount is not received, a tax reduction occurs, even if this may later be balanced out.
Note
The filing of incorrect VAT advance returns can also lead to criminal tax consequences even for minor errors. It is therefore worthwhile to obtain comprehensive advice beforehand.