Tax assessment proceedings

What it means

Assessment proceedings are the part of tax administration in which the tax administrator fixes the tax, or a difference in tax, by decision. Tax declared in a filed return is not fixed this way: the proceedings run when the office changes the declared figure.

They are not the tax audit itself but what follows it. They open when the audit report is delivered together with a call to comment, and they close with the assessment decision.

The burden of proof lies with the taxpayer: whatever it states in the return and in the books it must support with documents and other evidence. The tax administrator, in turn, proves that a document does not match reality. The Tax Procedure Code therefore turns not on whether an invoice exists but on whether the supply really took place.

How it works in practice

Commenting on the report is the last cheap chance to put evidence on the file: the deadline is statutory and missing it is not forgiven. An appeal decided by the Financial Directorate comes next, and after that an action before the administrative court.

The right to assess lapses once the preclusive period runs out, counted from the end of the year in which the return fell due and longer where a tax loss has been claimed. After that no proceedings may open, however right the finding is on the substance.

Once the report arrives we first inspect the file to see what the administrator relied on. The response is then built on a list of evidence: contracts, correspondence, delivery notes, requests to hear witnesses. We represent the client in the proceedings under a power of attorney, which has to be lodged with the administrator before the first step.

What to watch out for

A difference the office finds costs more than correcting it yourself: the penalty carries a lower rate on a supplementary return filed in time. Interest also runs from the original due date, so across three audited years the difference gains interest for the whole of it.

The company does not check its electronic mailbox and the report with the invitation counts as delivered even though nobody opened it. The deadline for a response passes in silence, the administrator decides on its own findings alone, and evidence that could have overturned them reaches the file at the appeal stage at best, if at all.