The resumption of proceedings is an effective remedy in fiscal administrative practice in order to intervene in proceedings that have already been legally concluded. Even if there are legitimate reasons for a resumption, the resumption is by no means mandatory. Rather, it is for the authority to decide on this in the exercise of its discretion. The tax amounts (absolute and relative significance) as well as the proportionality of the tax effects are aspects that affect the exercise of discretion and can lead to the avoidance of a resumption.
Tax audits often take place long after tax assessments entered into force. Likewise, it often happens that taxpayers subsequently want to claim business expenses, but the tax procedure has already been legally concluded. In both cases, if certain conditions are met, the resumption of the proceedings may break the legal force of a decision. Whether the resumption is actually ordered in the event of a justified reason for resumption (eg newly emerged facts) is at the discretion of the tax authority. Discretionary decisions must always be justified by considering all discretionary circumstances. The absolute and relative significance of the tax amounts and the proportionality of the tax effects may lead to the avoidance of resumption. In such cases, the administrative burden is not economically proportionate to the tax implications, so consequently no resumption is to be ordered.
Absolute insignificance is based on the absolute amount of the additional tax amount resulting from the resumption. The relative insignificance must be assessed based on the tax effects of the specific reasons for resumption in relation to the previous tax amount or the previous tax assessment. If the amendments to the decision that is to be resumed are both absolutely and relatively insignificant, the exercise of discretion in favor of legal validity (ie no resumption) must be exercised. It is however questionable up to what amounts this significance can be assumed.
In the judiciary this limit is set relatively low. The following examples from jurisprudence practice are intended to illustrate this:
This leads to the conclusion that changes in the upper three-digit range or in the lower four-digit range can be regarded as absolutely insignificant and changes of up to one percent as relatively insignificant. In addition, these tax effects must also be insignificant in their entirety. This circumstance is particularly important in the case of resumptions concerning several proceedings (eg VAT for 2015 to 2017). To determine the significance in these cases, the tax effects of several years must be added up. Accordingly, the tax effects must also exceed the de minimis threshold over the entire period in order to be accessible to resumption. However, this overall tax consideration only applies on the premise that netting is only permissible within the same type of tax (no netting of income tax and VAT) and that there are similar reasons for resumption in every year.
If the absolute or relative insignificance thresholds are exceeded, the effects of the resumption must also be reviewed with regards to its overall tax impact. In doing so, the tax authority must weigh up whether the formal reason for the new decision (reason for resumption) is proportionate to the result of the new substantive decision. The more the established reasons for resumption differ in their tax effects from those which arise overall as a result of the resumption of proceedings, the more weight must be attached to the legal interests of the taxable person in the continued existence of the previously issued final decision.
The tax authority has to deal with this circumstance in the context of the exercise of discretion, taking into account the previous overall behavior of the person liable to pay the tax. Any intention of the taxable person to commit tax fraud or evasion has to be taken into account.
The thresholds of the significance of a tax impact are usually easily exceeded, especially since in the jurisdiction absolute changes in the higher three-digit or lower four-digit range or relative changes of more than one percent are no longer considered insignificant. Where the resumption of proceedings concerns several years of assessment, it must be assessed as a whole whether or not there are only insignificant changes, whereby the effects must be added up within the same type of tax.
If one of these limits is exceeded, the proportionality of the effects must also be considered. For this purpose, the tax effects that result directly from the concrete reasons for resumption are set in relation to those that arise additionally. The authority must always take these aspects into account in its discretionary decision.
Mag. Robert Rzeszut ist Partner im Bereich Steuerberatung/Tax Litigation bei Deloitte Österreich in Wien. Als Steuerberater betreut er sowohl große nationale und international tätige Unternehmensgruppen als auch Familienunternehmen und Privatpersonen. Er ist Experte für Abgaben-Verfahrensrecht und führt insbesondere komplizierte und umfangreiche Beschwerden und Revisionen an die Verwaltungsgerichte, an Höchstgerichte sowie internationale Verständigungsverfahren. Als zertifizierter Finanzstrafrechtsexperte ist er überdies auf Selbstanzeigen und finanzstrafrechtliche Verteidigung spezialisiert.