Director’s liability: Right to apply for a reopening of tax assessment proceedings

On 27 December 2021 the Federal Fiscal Court (BFG, 27.12.2021, RV/7101196/2021) decided that a director who is held liable for taxes of the company has the right to apply for a reopening of the tax assessment proceedings on his own behalf, irrespective of an application by the company.

Facts

The complainant was a managing director of a limited liability company (GmbH) in liquidation. On 16 February 2017, the GmbH was served with both the value added tax (VAT) assessment notice and the corporate income tax (CIT) assessment notice for the year 2015; due to the lack of submission of tax returns, the tax base was estimated for VAT and CIT purposes. The GmbH was deleted from the commercial register.

By decision of 26 April 2019, the complainant, as the representative of the limited liability company, was held liable for VAT of the company. On 4 July 2019, the VAT and CIT returns were filed. On 29 October 2019, an application was filed on behalf of the GmbH to reopen the proceedings with regard to the VAT assessment and the CIT assessment, referring to the newly submitted tax returns. With its decision 17 August 2020 the tax office rejected this application due to it being unfounded . In a written statement dated 8 June 2020, the complainant subsequently filed the contested application for the reopening of the proceedings in his own name through his tax representative, referring to the application for the reopening of the proceedings of 28 October 2019, and requested a re-assessment of the tax liability for the year 2015.

The tax office rejected this request with its decision of 22 July 2020. It argued that the applicant did not have the right to file such an application. In the following, the complainant filed an appeal against this decision.

Decision

The appeal was dismissed by the Federal Fiscal Court (BFG) due to it being unfounded insofar as the application for reinstatement related to the corporate income tax because the director was not held liable for corporate income tax.

However, the BFG upheld the appeal to the extent as the application for the reopening of proceedings related to VAT.

Pursuant to § 303 (1) BAO, proceedings concluded by a decision may be resumed at the request of the party or ex officio if, among other prerequisites, facts or evidence have newly emerged in the concluded proceedings], and knowledge of these circumstances alone or in conjunction with the other outcome of the proceedings would have resulted in a different decision in the decision. A “party” is authorised to file an application for reopening. The concept and meaning of the term “party” in § 303 BAO is corresponding to § 78 BAO, meaning that a  person considered to be liable to tax (§ 77 BAO) qualifies as a “party” for that purpose.

Since in the present case the complainant was held personally liable and a liability order was issued against him, he according to the BFG he qualifies as a “party” in relation to the application for the reopening of the proceedings of the limited liability company to the extent of his own liability (VAT).

This result can also be derived from § 248 BAO according to which persons who have a secondary liability for taxes may also file an appeal against the decision on such tax claim. What § 248 BAO explicitly stipulates for the right of appeal shall also apply to other legal remedies, such as an application for the reopening of the tax proceedings, according to the BFG.