Can an additional VAT return be filed after the end of a tax inspection?

During a tax inspection, the tax administrator concluded that the taxpayer had not provided sufficient evidence to prove that they had received the services on which they deducted input VAT. On that basis, the tax administrator issued orders to pay additional tax. After these were issued, the taxpayer 'surprised' the tax administrator by filing additional VAT returns for a lower tax, submitting new evidence to prove the correctness of the original assertions.

The tax administrator dismissed the additional VAT returns and discontinued the proceedings on the grounds that the taxpayer had filed the additional returns outside the tax inspection’s deadline and had not submitted new evidence that would justify a repeated tax inspection. The Appellate Financial Directorate (AFD) was of the same opinion.

However, the regional court reversed the AFD’s decision on the grounds that it had misapplied the law and that the additional VAT returns had been filed in accordance with law. The court stated that the Tax Procedure Code does not preclude the filing of an additional tax return for a tax lower than that determined by the results of a tax inspection. The situation would be different if the last known tax had been determined using auxiliary mechanisms or by agreement or if the additional tax return had been filed in the course of a tax inspection.

The SAC upheld the regional court's conclusions and emphasised that a taxpayer has the right to file an additional tax return for a lower tax if they find out that the tax had been assessed at an incorrect amount. This right is not even limited by the end of a tax inspection (except for tax determined using auxiliary mechanisms or by agreement). The SAC rejected the AFD’s assertion of the presumption of correctness in respect of a tax assessed based on a tax inspection. Following the filing of an additional tax return, the tax administrator may initiate a tax inspection and assess the tax ex officio, whereby a balance between the rights of the tax administrator and of the taxpayer is ensured. This means that within the deadline for assessing tax, the tax proceedings are open to both the taxpayer and the tax administrator.

Unlike the regional court, the SAC held that for the possibility of filing an additional tax return after the end of a tax inspection, it is not relevant whether there are any reasons for a repeated tax inspection.

The SAC’s decision has a significant impact on practice, as tax authorities must carefully assess new evidence and facts submitted by taxpayers and cannot automatically discontinue proceedings on additional tax returns by referring to the presumed correctness of the previously assessed tax. In turn, taxpayers should be aware of the possibility to file additional tax returns even after the end of a tax inspection.