This summary is a short overview of the answers to a questionnaire on mediation in tax cases, given by members from : Lithuania, Portugal, The Slovak Republic, Austria, Luxembourg, Slovenia, Italy, Germany Ukraine, Estonia, Greece and the Netherlands. It follows the order of the questions asked and where possible the answers are combined. The subject was discussed during the Beaulieu seminar in October 2009. At the end some conclusions are drawn.
Does the government offer the possibility of mediation in tax disputes
Only Lithuania, Austria, Luxembourg, Italy, Ukraine, Greece and the Netherlands gave yes as an answer to these questions. During the discussion the German member noticed that there is a pilot on mediation in tax cases running in one of the Länder of Germany. This does not mean that an amicable settlement in tax matters is impossible in the other countries. A distinction has to be made between a settlement in court, with a tax judge confirming the settlement in a sentence and, on the other hand, an agreement reached with the help of a mediator. The latter just conducting the process to a solution, not having the power to decide for the parties or to force parties to a settlement. In the discussion some concern was expressed on the risk of persons being treated unequally. The choice for mediation in a tax case could lead to a tax reduction where simply executing the rules would not. This leads to the conclusions that mediation in “legally clear cases” is not the thing to do.
Is this process of mediation based on formal legislation
Where mediation is possible it is as a rule imbedded in legislation.
Is this process of mediation based on government policy
In Lithuania, Luxembourg, and Ukraine the process based on both legislation and policy.
Can mediation be initiated in a ongoing legal (tax)procedure
Except for Austria a mediation process can be initiated in an ongoing tax-procedure.
Does an attempt to mediate a tax dispute postpone the legal procedure
In Greece, the Netherlands and Lithuania the legal procedure is postponed by a mediation process. It did not become quite clear how the procedure would continue in the other countries.
Are there specialized mediators on the pay roll of the courts
Are there specialized mediators on the payroll of the tax administration
The Netherlands know mediators attached to both the courts and the tax administration, Greece, Lithuania and Ukraine have mediators working with the tax-administration.
In which way are (tax) judges involved in a process of mediation
The answers given are very different therefore they are quoted :
There is no involvement ; the “médiateur” is an independent authority who intervenes in full autonomy with the tax administration.
To speed up the proceeding, the Senate member may summon the parties
Judge is not involved in settlement of tax sum (that is some kind of mediation, which is possible only when neither tax administration, nor taxpayer has enough evidence on calculating taxes). Settlement of tax sum is possible also before tax dispute arises (e.g. during tax audit).
Under the Administrative Dispute Act (art. 45.) the president of the senate can invite the parties to the settlement (before the main hearing), but it was never used in the practice of adjudicating the tax cases.
The Civil Code which is used in the administrative dispute when certain legal situations are not covered in the Administrative Dispute Act, has the provisions for alternative dispute resolutions. So when the administrative judge would peruse the settlement between the parties the provisions of the Civil Code would be used.
There are no possibilities in Slovak republic to commence a mediation procedure. Only tax procedure and judicial overview are accepted by Slovak law. I know only one exception from this rule. It is Public Tax Agreement determining the amount of tax obligation. A tax authority will have to offer the Public Tax Agreement to a taxable person in case of lack of evidence. It is very rare approach for solving a tax case within tax proceedings.
Basically, we must distinguish the case of the assented assessment from the case of the judicial conciliation (or settlement).
The assented assessment is a particular administrative procedure which, involving in a contradictory position the tax Administration and the taxpayer, comes to fix, by mutual consent, the fiscal debt according to law : in this procedure the judge does not play any role at all.
However, considering that the assented assessment is finalized by the payment of the sums due and that, in certain cases, once reached, the assessment may be completed or revoked, the judge can be asked to verify the real implementation of the procedure or the legitimacy of the implementation or the revocation of the assessment in case of controversy between the parties.
The judicial conciliation instead requires the existence of a pending lawsuit and can be proposed no later than the first hearing, both by each party and by the judge of first instance.
If the settlement is not reached on the first hearing, the judge shall assign a term, no longer than 60 days, so that the parties can elaborate an out of court settlement proposal.
In case a settlement is reached, either in court or out of court, the judge shall in any case verify the existence of the procedural conditions of the former complaint and of the conditions of admissibility of the conciliation.
In a matter of rights which cannot be disposed of, conciliation must abide by the law and represent a fair settlement of the controversy ; for this reason, it can be used, under the control of the judge, only in case of estimatory controversies or in cases where the ascertainment of uncertain questions of fact is involved.
In no case can the judge express an evaluation on the suitability of the settlement.
Both the assented assessment and the conciliation differ from the remission for tax evaders, in which, through the payment of a lump-sum by the tax payer, pending lawsuits or administrative procedures for the assessment or the collection of taxes are closed.
Where the taxpayer makes recourse to the remission, it is up to the judge to verify the normal course of the procedure before declaring the extinction of the controversy or the illegitimacy of the tax claim laid by the Administration.
Apart from the possibility a judge has to lead parties to an amicable settlement (compromise) he can suggest to parties to consider mediation. If parties agree to this, the judge will adjourn the hearing and send notice to the mediation bureau in court.
The judge can ratify an agreement reached between the tax administration and the tax payer. Also the judge can terminate the proceedings.
Who can take the initiative to do a mediation attempt (e.g. the judge, tax administration, taxpayer)
The general outcome is that both parties can take the initiative. But to actually go into a mediation process, consensus of both parties is necessary. A judge can only suggest mediation.
Who is responsible for the costs of mediation
In Luxembourg the mediator is free of charge. I the other countries each party covers its own costs. In the Netherlands, the first two-and- a- half hour mediation are free (paid for by the state) and the other costs are to be paid by the parties each of them half of the costs.
What are the legal effects of a successful mediation
An agreement in a procedure by the “médiateur” has no binding effect and it is always for the administration to decide to give effect to such an agreement by amending or replacing the decision which the mediation was about.
Mostly the 1st instance authority issues a pre-decision („Berufungsvorentscheidung“)
Successful mediation has the statues of the legal effectiveness and represents the executory title.
The assented assessment is finalized by the payment of the sums due no later than 20 days from the subscription of the settlement : it prevents the taxpayer from proposing the complaint and the tax Administration from modifying the assessment (out of special cases in which this latter can be implemented or revoked).
Besides, administrative sanctions are reduced to a quarter of the minimum and, if the fiscal debt is paid off before the opening of the debate, penal sanctions are halved and the additional sanctions decay.
The conciliation (in court or out of court) is sanctioned by a trial record which constitutes a document of execution for the collection of the sums due and determines the extinction of the tax proceeding (to be declared by a collegial judgement or by a presidential decree).
The conciliation is finalized by the payment of the sums due no later than 20 days from the subscription of the trial record : administrative sanctions are reduced of a third of the minimum, penal sanctions are halved and the additional sanctions decay.
The remission for tax evaders determines the extinction of pending lawsuits and the closing of tax procedures of assessment and collection, in addition to other different effects.
When parties come to an agreement they sign a contract which is also signed by the mediator. The legal case is then to be withdrawn and parties are bound to the contract. This contract can be enforced before a civil judge.
In the case of an agreement between the tax administration and the tax payer, the administrative act that imposes the tax or the fine becomes definite. If the case is pending in front of an administrative court, the proceedings are terminated. The new administrative act can be contested in front of a court only for very specific reasons. In the case of a mediation by the “Citizen’s Advocate” the tax administration issues an administrative act that replaces the act imposing the tax or the fine that was considered unlawful.
And what happens when a mediation attempt has failed
The answers to this question in general were, not surprisingly, that the initiated court case would be continued.
What are the results of mediation in tax matters over the year 2008 (as far as known)
As for the given results, there are little mediation in tax cases being a fairly new phenomenon. And they’re not comparable. Still it is interesting to see that there are some positive results, though not compared to the total amount of tax cases it is impossible to say if mediation can lead to e.g. a considered workload reduction of the court.
|Luxembourg||Netherlands (1 court only)|
|Total number of applications for mediation||120 (sept. 2007 – sept. 2008 – all direct and indirect taxes covered||73 (first 6 month of 2009)|
|Mediation with a complete positive result||30||37|
|Mediation with a partly positive result||15||3|
|Mediation with no result||47||9|
Could you describe a personal experience with amicable settlement in tax court cases.
No personal experiences were given, due to the separation of the processes of mediation ad legal procedures.
Amicable solutions in tax cases are common in almost all of the countries. Judges tend to lead parties through a process to such a solution. And, if such a solution cannot be reached, the judges decide the matter. Mediation however, the possibility to settle a tax case with the help of a specialized mediator, not being a judge, is not that widely spread. In the countries where it is applied, it is a fairly new method and figures about the results are still few. Mediation is not a method to be applied in all tax cases because of the risk of violation of tax laws and inequality between tax-payers. Still, mediation has lead to some settlements so can be considered an applicable method, also in tax cases.