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Let's take an example

A business submitted a mandatory appendix to its VAT return in the Czech Republic (the famous "VAT Control Statement”).This statement should mention the address and the number of clients in two separate columns. The box “Street” mistakenly contained the client's zip code.

What are the consequences of this typo? 

CZ VAT authorities imposed a fine of 50,000 CZK because the original submission was assessed as failed !! (see aff. 43 Af 6/2020-37)


How do you dispute a fine?

So what should you do when your company receives a VAT fine? Is it possible to contest it?

Yes, with the proportionality test.

You should know that the State's power to impose penalties is not unlimited: it can, of course, impose a fine in the event of a company's failure to comply, but this financial penalty must be proportionate to the seriousness of the offence. To put it another way, the penalty must not go beyond what is necessary to achieve the objectives of collecting the tax correctly and avoiding fraud.

This is the philosophy of the Court of Justice.

The VAT expert's eye

The rules of the VAT game are complex and mistakes made by companies in the management of their reporting obligations (e.g. inclusion of a transaction in the wrong box of a VAT return) are frequent.

The bad news? Each error is usually subject to an automatic and immediate financial penalty.

The good news? The company that has to pay a penalty can defend itself. The penalty imposed by the tax administration must be proportionate to the objectives set by the VAT Directive, i.e. to ensure tax collection and to prevent fraud.

In this respect, the use of the proportionality test can be extremely effective in forcing the tax administration to temper its enthusiasm.

Don’t Let VAT Fines Ruin Your Business - Contact Our Tax Advising Firm Today

If you are a business owner who trades goods or services across the EU, you know how complex and confusing the VAT rules can be. You may have encountered situations where you were fined for not complying with the VAT regulations of another member state, even if you were not aware of them. This can be frustrating and costly, especially if you feel that the fine was unjustified or disproportionate.

That’s why you need the help of our tax advising firm. We are experts in EU VAT law and we can help you contest any VAT fine that you receive from another member state. We can also help you with:

  • Minimizing your tax liability by researching the tax law and finding the best tax strategy for your business
  • Reducing or eliminating penalties by requesting an abatement or a compromise with the tax authorities
  • Planning for the future by creating a tax plan that takes into account your business goals and the changing tax landscape
  • Representing you in tax disputes by negotiating with the tax authorities or defending you in court if necessary

Don’t let VAT fines ruin your business. Contact our tax advising firm today and let us handle your tax issues for you. We will save you time, money, and stress.

We offer a free video conference to assess your situation and provide you with a tailored solution.