Securing the interests of the State in cases of tax evasion
Law 2523/1997, as amended by Law 3943/2011, including administrative and criminal sanctions relating to the tax legislation, sets out in Article 14 measures to secure the interests of the State in cases of tax evasion.
In particular, par. 1 stipulates that where a competent tax authority identifies, on the basis of a special audit report, infringements of tax laws consisting in failure to pay to the State a total sum exceeding EUR one hundred and fifty thousand (€150,000.00) relating to VAT, as well as withholding and cascading taxes, duties and contributions, tax offices shall not issue certificates or attestations for executing notarial deeds for the transfer of property.
In this case, the secrecy of deposits, accounts, shared accounts, all kinds of investment accounts, contracts and transactions on financial derivatives, as well as of the content of safe-deposit boxes maintained by the offender in banks or other financial institutions is suspended with regard to the State and 50% thereof shall be frozen. These restrictions shall not apply to amounts from salaries and pensions deposited to accounts held by natural persons.
Furthermore, the abovementioned restrictions shall not apply where it is demonstrated on the basis of public documents that the taxpayer holds a definite and processed claim against the State amounting to a sum equal to or greater than the amount of taxes, duties and contributions yet to be paid to the State, provided that the said claim has not been assigned. The taxpayer shall submit a solemn declaration to the effect that the claim has not been assigned. Should a taxpayer hold a claim amounting to a sum lower than that, the amount of the deposits to be frozen is reduced by the amount of the sum owed by the State to the taxpayer.
The sanctions referred to in this paragraph are also imposed on any offenders found to have received and used fictitious documents, to have issued fictitious, fake tax documents and to have falsified such documents, provided that the value of the transactions referred to therein, in aggregate as of the time of identification of the infringements, exceeds EUR three hundred thousand (€300,000.00). By way of derogation, however, the above sanctions are not imposed on offenders found to have received and used fictitious documents, if the fictitious nature of these documents is attributable to the issuer.
Moreover, the same penalties shall be imposed on any persons holding and using more than one VAT ID Number or entering on their tax documents and tax returns a VAT ID Number held by another person, which has not been issued to them, and who are liable to a fine of EUR four thousand four hundred (€4,400.00) for this reason.
The above sanctions also apply to all natural persons serving in the capacities referred to in Article 20(1) to (3) of Law 2523/1997, i.e. those deemed to have committed the offense of tax evasion and in particular:
1. In the case of legal persons, the ones deemed to have committed the offense of tax evasion shall be:
(a) In the case of the domestic sociétés anonymes, the chairmen of the Boards of Directors, the managing directors or the managing or jointly acting directors, the general managers or managers, as well as any person in general who is appointed, either directly by law or by private will or by court judgment, to carry out the administration or management of these companies. In the absence of all the above persons, the ones deemed to have committed the offense of tax evasion are the members of the boards of directors of these companies, provided that they are actually performing, on a provisional or permanent basis, any of the duties referred to above.
(b) In the case of general or limited partnerships, their partners or administrators, and in the case of limited liability companies, their administrators, and should there be no such persons appointed or should they be absent, any partner.
c) In the case of cooperatives, their chairmen or secretaries or accountants or administrators.
2. In the case of joint ventures, societies, civil societies, joint-stock companies or “sociétés en participation”, the ones deemed to have committed the offense of tax evasion shall be their representatives and, in the absence thereof, their members. Where the members of the above entities also include legal persons or foreign undertakings or foreign organizations, the provisions of paragraphs 1 and 3 shall apply mutatis mutandis.
3. In the case of foreign undertakings and all kinds of foreign organizations in general, the ones deemed to have committed the offense of tax evasion shall be their managers or representatives or agents in Greece.
The above sanctions are imposed as of the time of incurrence of the obligation to pay the VAT, turnover tax, any deducted and imposed taxes, duties and contributions, irrespective of whether these persons have divested themselves of the capacity concerned in any way and for any reason whatsoever afterwards and prior to activation of the measures in question. In the event of receipt and use of fictitious tax documents, issuance of fictitious, falsified tax documents and falsification of such documents, the same sanctions shall also be imposed on any persons serving in the capacities referred to in Article 20(1) to (4) of Law 2523/1997, as detailed above, as of the time of commitment of the offense.
Under Article 14(3) of Law 2523/1997, the tax authority responsible for issuing the relevant notices of assessment of taxes, duties and contributions or taking the decisions for imposing fines in accordance with the Code of Books and Records shall issue a deed informing immediately, in any way whatsoever, all other tax offices, the Deposits and Loans Fund and the Bank of Greece, so that the latter can proceed to inform the financial institutions operating in Greece. The above departments and bodies shall, upon being notified, apply the prohibitions and obligations referred to in the deed concerned immediately, without any other procedure or formality, while at the same time informing the tax office responsible for the enterprise in question.
The deed issued by the tax authority shall also be communicated, along with a copy of the special audit report, to the Audit Directorate of the Ministry of Economic Affairs and Finance, as well as to the offender at his/her known domicile or the registered office of his/her enterprise, and the latter may file an application with the Minister for Economic Affairs and Finance, through the tax authority responsible for issuing the deeds, requesting partial or total suspension of the restrictive measures. An appeal may be filed against an explicit or tacit refusal of the Minister for Economic Affairs and Finance, in accordance with the provisions of the Code of Administrative Procedure.
The provisions of Article 13(9) of Law 2523/1997 apply to the hearing of the appeal, namely: (a) the appeal shall be filed, in accordance with the Code of Administrative Procedure, with the President of the Administrative Court of First Instance of the taxpayer’s domicile or the enterprise’s registered office; (b) the deadline set for filing the appeal and the actual filing thereof shall not suspend implementation of the contested decisions; (c) where the requirements for suspension referred to in Article 202 of the Code of Administrative Procedure are met and following request from the person concerned, the President of the Administrative Court of First Instance or another judge of the Administrative Court of First Instance, as appointed by the former, may suspend implementation of the contested decision; (d) the administrative file including a detailed report on the views of the administrative authority is sent to the court within fifteen days after service of the appeal, in accordance with the Code of Administrative Procedure; (e) the hearing is set within two months of receipt of the file by the court and the relevant judgment is published within two months of the date of hearing. The judgment published on the appeal shall, within two months of publication, be communicated to the authority which is a party to the case, and the latter must ensure that the judgment is implemented within one month of communication; and (f) no appeal may be filed against the judgment of the President of the Administrative Court of First Instance.
Where the tax dispute is resolved on an administrative basis or through an administrative settlement, or where it is definitively processed on an administrative basis, with regard to the total sum of taxes, duties and contributions concerned, including any lawful surcharges or fines imposed in accordance with the Code of Books and Records, the suspension of the secrecy of deposits, accounts, etc., as well as the freezing of 50% of deposits is removed (without removing any other measures imposed). Removal of this restriction shall no longer apply, however, in the event of failure to pay two (2) consecutive installments of the above amount due. For the purpose of applying the above provision, the obligated taxpayer shall file a relevant application with the head of the competent tax authority, and the latter must, within two (2) months, issue the relevant notices of assessment. Any appeal filed against these acts does not suspend the effect of the measures taken. If the relevant notices of assessment are not issued within this deadline, the consequences and prohibitions provided for in Article 14 of Law 2523/1997 shall be removed automatically.
Moreover, the measures are removed automatically if the obligated taxpayer pays a sum exceeding seventy per cent (70%) of the total amount of the relevant taxes, duties and contributions owed, including any lawful surcharges or fines imposed. Should the provisions set out in this paragraph and in the previous one apply, the competent tax authority informs the Audit Directorate of the Ministry of Economic Affairs and Finance, all tax offices, banks and other financial institutions immediately, in any way whatsoever.