In January 2019, an amendment to the Tax Procedure Act came into force, providing MTA with additional options to demand payment of tax debts from the company’s management if they have intentionally caused tax damage to the state.
Of course, these matters are resolved in court, and according to MTA data, they have won 86.4% of liability disputes this year, resulting in a total amount of €3.2 million being upheld. Court decisions can be viewed in the State Gazette by entering keywords like “tax collection” and “responsibility of legal representatives.”
What does this mean? It means that a member of the management board bears significant responsibility. Additionally, it indicates that in cases of large tax debts, the only option might be declaring personal bankruptcy, which can be very inconvenient. Therefore, negligence or fraud does not come without consequences.
Often, tax debts are also caused by a “management style,” for example, following one’s gut feeling about how to run things. Here are some tips to pay attention to:
1. Review your pricing strategy. All taxes and related costs should be included in your prices.
2. Make sure you understand that VAT added to sales prices is NOT YOUR MONEY. VAT amounts are transit sums on our current account.
3. Plan your cash flows — income and expenses.
4. If you find yourself in tax difficulties, consider deferring your tax debt through payment postponement options.
