Are tax disputes capable of adjudication by a court, tribunal or body independent of the tax authority, and how long should a taxpayer expect such proceedings to take?

Tax (2nd Edition)

Romania Small Flag Romania

Tax disputes must be initially referred to administrative bodies functioning within NAFA (i.e., administrative appeal). If such bodies fail to issue a decision or the decision is not satisfactory to the taxpayer, it can file a claim with the courts of law, where the dispute usually undergoes two tiers of jurisdiction. Usually, tax disputes are brought in front of the courts of law, since the decisions issued in the administrative appeal phase are usually not satisfactory to the taxpayer. As of the issuance of the challenged tax deed and until the definitive settlement of the dispute by the courts of law, the tax dispute may take up to 4 or even 5 years.

As regards the transactions conducted between affiliated companies located in different states (i.e., Romania and another state) that were adjusted from a transfer pricing (“TP”) perspective by the Romanian tax authorities, the available remedies consist either of the national challenging proceedings, or the international proceedings (only) in case of double taxation. In what regards the international proceedings, taxpayers may revert also to the proceedings under the Double Taxation Treaty (the “DTT”) concluded between Romania and another state or under the EU Arbitration Convention (the “EUAC”). We underline that although the mutual agreement procedure provided under DTT and that under the EUAC are both international dispute resolution instruments with certain similarities, there are major differences between them. Advanced Pricing Agreements (“APA”) are available as a tool to mitigate TP controversy.

Australia Small Flag Australia

Yes, tax disputes are capable of adjudication by a court or tribunal.

Federal
Using income tax as an example, taxpayers that are dissatisfied with an income tax assessment or a private ruling from the Commissioner, can object to the assessment or ruling within a certain time period. There are some limited circumstances when a taxpayer cannot object to a private ruling. If the Commissioner disallows the objection, or is deemed to have disallowed the objection, then the taxpayer can apply to the Administrative Appeals Tribunal (AAT) for review of the decision or appeal the decision to the Federal Court. The following considerations are relevant when deciding whether to apply to the AAT or appeal to the Federal Court:

  • cost – it generally costs more to appeal an objection decision to the Federal Court;
  • formality – AAT proceedings are less formal than Federal Court proceedings;
  • flexibility – the AAT has greater procedural discretion than the Federal Court;
  • power to make orders – the AAT has power to ‘stand in the shoes’ of the original decision maker when making orders, whereas the Federal Court does not;
  • relief that can be sought – the AAT has power to make a wider range of decisions and orders than the Federal Court; and
  • costs – generally the AAT does not award costs, whereas the Federal Court does.

A taxpayer that decides to appeal to the Federal Court, has 60 days from the ATO’s disallowance (or deemed disallowance) of the objection to file the notice of appeal. The Federal Court has issued Taxation Practice Note TAX-1, which outlines the management of tax cases in the Federal Court, to ensure that cases are dealt with expeditiously. The first case management hearing will take place around 3 - 6 weeks from the date of filing the notice of appeal. At this hearing, the Court may fix the trial date. The Federal Court has published a practice note (CPN-1), which provides that the Court will endeavour to list the hearing within 6 months. The practice note also provides that the Court will endeavour to deliver its decision within 3 months of the final submissions. In practice, these time frames are often longer. If the decision has not been delivered within 6 months, then the Court will generally advise the parties of the date it expects judgement to be delivered.

If a taxpayer applies to the AAT for review of a decision, the first conference will generally be held within 6 to 10 weeks after lodging the application. If the matter cannot be settled at a conference, a hearing date will be set after the AAT has consulted the parties on their availability, the availability of witnesses and the likely length of the hearing. Following the hearing, a decision is likely within 2 months.

State revenue authorities
All states and territories permit appeals from taxation decisions by state or territory Commissioners either to a state or territory administrative tribunal, or the state or territory Supreme Court, or, in some cases, to both. How long it will take to receive judgement depends on the forum and the complexity of the issue. A court will usually take longer than a tribunal to deliver judgement. For example, in Victoria, the Victorian Civil and Administrative Tribunal will usually provide a decision within six weeks of the hearing, whereas the Supreme Court aims to deliver a judgement within three months from the date that judgement was reserved.

France Small Flag France

Administrative courts have jurisdiction over most tax matters, such as income tax and VAT (to the exception of registration duties, inheritance and gift duties, 3% real estate tax and wealth tax which are dealt with by the judicial courts). The first instance jurisdiction is the 'tribunal administratif' (administrative court). Appeal lies with the 'cour administrative d'appel' (administrative court of appeal). Finally, the 'Conseil d'État' (Administrative Supreme Court) reviews the legal conformity of decisions by lower courts and in doing so may, totally or partially, override a decision. The case is either settled by the Administrative Supreme Court (general case) or sent back for review to the administrative court of appeal. As a general rule, it takes between 8 to 10 years to reach a settlement before the Administrative Supreme Court.

By exception, The FTA can be condemned to a 'référé-provision' (provisional payment) to the profit of the taxpayer – especially in matters relating to VAT credit, withholding tax claim, and reimbursement relating to the 3% surtax on dividends or CVAE. It takes usually between 2 to 4 months.

Canada Small Flag Canada

A taxpayer who disputes an assessment of tax and cannot resolve the matter at the audit or objection stage will generally have the right to file an appeal in the Tax Court of Canada. The Tax Court operates independently of the CRA and has exclusive jurisdiction to determine appeals on matters arising under certain federal legislation, including the Income Tax Act, the provisions of the Customs Act pertaining to customs duties and taxes, and the provisions of the Excise Tax Act that pertain to the federal goods and services tax. In each tax appeal the position of the Minister of National Revenue is represented by a lawyer employed by the federal Department of Justice.

Appeals involving relatively small amounts of tax may be resolved on an expedited basis under the Tax Court’s Informal Procedure rules. In non-Informal Procedure cases, where an appeal has not been set down for a hearing or terminated within four months after the close of pleadings, the Court will require the parties to submit for its approval a proposed schedule for completion of the remaining steps in the appeal. Tax appeals may be heard within 12 - 18 months after being initiated but complex cases or cases requiring a hearing of more than one week may take much longer. However, the vast majority of cases are settled prior to a hearing; the decision to settle on behalf of the Minister of National Revenue is taken jointly by the Department of Justice and the CRA.

Parties have the right to appeal decisions of the Tax Court to the Federal Court of Appeal, and in turn, but only with leave, to the Supreme Court of Canada.

Taxpayers who wish to challenge the correctness or reasonableness of a discretionary decision made by the Minister of National Revenue may seek relief by making an application to the Federal Court for judicial review of that decision. The Federal Court also has exclusive jurisdiction to grant certain types of relief against the Minister, including the issuance of an injunction, writs of certiorari, prohibition, mandamus and quo warranto and declaratory relief. However, the Federal Court, almost without exception, declines to hear cases involving challenges to tax assessments.

Belgium Small Flag Belgium

A taxpayer who disagrees with an income tax assessment by the tax administration must in principle first submit a written tax complaint with the tax administration within a period of six months. The taxpayer may subsequently file a petition before the competent Tribunal of First Instance if the tax administration delivers a dissatisfying ruling or if it altogether fails to issue a ruling on the complaint within six months of its filing. In the event of a dissatisfying ruling, the petition must be filed within three months.

In other words, this administrative phase is in principle a mandatory prerequisite for the taxpayer who wishes to bring his case to the tribunal.

An appeal against the decision of the Tribunal of First Instance may be lodged with the Court of Appeal by either the taxpayer or the tax authority within one month.

Appeals against the judgements of the court of appeal can be brought to the Belgian Supreme Court which regulates the application of the law.

The time required for these proceedings may strongly vary on the basis of an array of factors. The judicial procedure before the Tribunal of First Instance takes in principle one to three years, and may run up to five or seven years if an appeal is lodged with the Court of Appeals.

Bulgaria Small Flag Bulgaria

All tax disputes are capable of adjudication by a court. Which shall be the competent court depends on the issue.

For instance, if a tax assessment act is appealed:

  • the tax assessment act is subject to appeal before the first court instance which is the regional administrative court;
  • the judgment of the regional administrative court could be appealed before the Supreme Administrative Court.

The duration of the proceedings depends on the kind of the tax dispute. For instance, if a tax assessment act is appealed usually it takes between one and two years.

United States Small Flag United States

Tax disputes can be resolved administratively or judicially. Within the IRS, the IRS Office of Appeals is an independent appeals process where taxpayers can resolve tax disputes. The Office of Appeals will try settle tax disputes without litigation. If no settlement is reached, a taxpayer can still dispute the tax in federal court. Taxpayers can bring tax cases in federal court to the U.S. Tax Court, a federal district court, or the U.S. Court of Federal Claims. All of these courts are independent of the IRS.

Ukraine Small Flag Ukraine

Except for the tax authorities, only courts of administrative jurisdiction are entitled to resolve tax disputes.

According to Ukrainian legislation, the judicial case in the court of first instance shall be considered and resolved within a reasonable time, but not more than a month from the date of the opening of the proceedings. The same provisions shall be applied for proceedings in appellate courts, cassation courts, and in the Supreme Court.

Generally judicial proceedings, in all instances, last at least one year. There are several factors which influence the mentioned duration of the proceeding:

  • in almost all cases, tax authorities submit an appeal and a cassation to the courts of appeal, and the courts of cassation accordingly;
  • notwithstanding the foregoing, usually courts do not comply with the term of one month for consideration of the case.

According to statistics provided by SFS, during 2016 there were 27,300 pending litigations against decisions and actions of the tax authorities.

Cyprus Small Flag Cyprus

Decisions of the tax authorities can may be can be challenged by submitting an application to the Tax Tribunal, an independent body, or to the Administrative Court. A decision of the Administrative Court may be the subject of an appeal to the Supreme Court. The Tax Tribunal is required to reach a conclusion within a year of receiving an application. There are no set time limits for the courts.

United Kingdom Small Flag United Kingdom

The first instance tribunal for most tax disputes is the Tax Chamber of the First-tier Tribunal (FTT). The Upper Tribunal (UT) commonly deals with appeals from the FTT only on matters of law. However where the case is categorised as complex and where the UT and both parties consent, the UT may hear the case at first instance. A case requiring a hearing of less than a week will usually be heard by either tribunal within a year.

Appeals from the Upper Tribunal are to the Court of Appeal, then to the Supreme Court. In both instances, permission is required and appeals can only be made on questions of law. Cases usually take around 18 months to complete in the Court of Appeal and two years in the Supreme Court. All tax tribunals and courts mentioned above are independent of HMRC.

Ecuador Small Flag Ecuador

Administrative tax resolutions can be challenged at court. Once a judicial proceeding is initiated, administrative actions available to the taxpayer become inadmissible. Judicial proceedings may take from 1 to 4 years. The court judgment may be challenged at National Court. In some cases, resolutions of the National Court may be challenged at Constitutional Court.

Gibraltar Small Flag Gibraltar

Appeals arising from the determinations of the Commissioner lie to the Income Tax Tribunal.

Israel Small Flag Israel

Yes. The ITA may audit a tax return and issue its own tax assessment. Generally, a taxpayer may dispute a tax assessment by a written notice of objection to the assessing officer requesting additional review and change of the assessment. The written objection should be submitted within 30 days after the tax assessment is served to the taxpayer and must clearly state the grounds of the objection. The assessing officer who prepared the assessment does not hear the objection, but rather, it is heard by a second officer in the same local office. The decision of the second officer is subject to appeal to the District Court, which decision may then be appealed to the Supreme Court.

It should be noted that the ITA serves as Israel’s competent authority with respect to mutual agreement procedures applicable under Israel’s double tax treaties.

Depending on the specific dispute, it may take up to a few years to obtain a final resolution.

Switzerland Small Flag Switzerland

Tax disputes usually start, prior to any litigation, by way of a formal complaint with the tax authority that issued the tax assessment decision. The decision is then re-examined by the tax authority. If no settlement is reached, the taxpayer can dispute the tax assessment in cantonal courts and federal courts, which are independent from the tax authorities. Ultimately, an appeal may be filed in front of the Federal Supreme Court.

Italy Small Flag Italy

Tax disputes (including assessment notices, denial of tax refunds, denial of application of preferential tax regimes) can be brought before courts. Particularly, with reference to tax disputes, the Italian judicial system features three judicial degrees. Jurisdiction for the first two degrees in tax related matters, is attributed to Provincial and Regional tax courts respectively. The third degree is under the jurisdiction of a specific section of the Supreme Court (Corte di Cassazione) specialized to deal with tax cases.

The length of the judicial procedure depends on the degree. Such length can be estimated as 2 years each for the procedures before the Provincial and the Regional tax courts and 4 years before the Supreme Court.

Portugal Small Flag Portugal

As a rule, taxpayers may dispute any tax assessment or tax authority decision before a judicial court. Such tax disputes may take several years until a definitive decision is taken.

Since 2011 it is also possible for taxpayers to dispute tax assessments and tax authority decisions before arbitral courts, allowing taxpayers to get a definitive tax decision in a 6-8 months period.

Kenya Small Flag Kenya

The Tax Appeals Tribunal Act, 2013 (the TAT Act) established the Tax Appeals Tribunal (the Tribunal) to hear and determine appeals filed against any tax decision made by the Kenya Revenue Authority. Matters before the Tribunal are required to be heard and determined within a period of ninety days (in practice the period is much longer, often as much as one (1) year). However, some matters may take longer depending on the complexity of the issues.

A party who is aggrieved with the decision of the Tribunal is required to file an appeal to the High Court. The decision of the High Court can further be appealed to the Court of Appeal. Appeals to the High Court and the Court of Appeal are only on matters of law.

An appeal to the High Court and the Court of Appeal respectively can take between 1 to 3 years to be heard and determined.

Poland Small Flag Poland

In cases of a negative tax decision or tax ruling, taxpayers have the right to file an appeal with the administrative courts. The first instance court is a Regional Administrative Court (wojewódzki sąd administracyjny) with the authority for a given location. The judgment of the Regional Administrative Court can be appealed against by a taxpayer or by the tax administration to the Supreme Administrative Court (Naczelny Sąd Administracyjny).

There are no formal deadlines for court proceedings in Poland. In practice, proceedings before the Regional Administrative Court can take from six to ten months, and before the Supreme Administrative Court a further year or two.

Japan Small Flag Japan

Yes. If a taxpayer receives an assessment finding deficiency in tax as a result of the tax audit by the competent reginal taxation bureau or the district tax office, and if the taxpayer wants to dispute it, the taxpayer can file, within 3 months from the assessment, either (i) a request for reconsideration with the National Tax Tribunal, or (ii) a request for reinvestigation with the district tax office or the reginal taxation bureau that rendered the subject assessment. The first choice should be common in practice. The National Tax Tribunal is a quasi-judicial body that reviews the legality and appropriateness of tax assessments, which is claimed to be independent from the tax authority but is technically within the administrative organ of the tax authority.

The review of the National Tax Tribunal generally takes up to one year. If it renders a decision in favor of the taxpayer, the tax authority cannot appeal and the decision is final. If it renders a decision against the taxpayer, the taxpayer can file a lawsuit requesting cancellation of the assessment, with the district court having jurisdiction over the case, within 6 months from the decision of the National Tax Tribunal. The review of the district court generally takes 1.5 to 2.5 years. If either the taxpayer or the government loses the case, it can appeal up to the high court, where the review would generally take six months to 1.5 years. If either the taxpayer or the government loses the case at a high court, it can further appeal up to the Supreme Court, however, the appealing party has to obtain a writ of certiorari to have substantive review of the Supreme Court; otherwise the appeal is dismissed without considering merits. The review of the Supreme Court, including its review of whether a writ of certiorari should be given, generally takes 1.5 to 3 or more years. These district and high courts as well as the Supreme Court are not a special court for tax or administrative cases, but are an ordinary court that handles civil and criminal matters along with tax cases. In judicial proceedings in courts, an appeal by the government is not prohibited.

The Netherlands Small Flag The Netherlands

A dispute regarding corporate income tax matters usually starts when a tax assessment is imposed in deviation from a tax return filed or after a tax audit. An assessment should be appealed within six weeks after the date of the assessment. In the event the appeal is denied by the tax authorities, the denial can be appealed with a regional court and subsequently with one of the four courts of appeal and the supreme court in The Hague.

The appeal process can take a few months with the tax authorities and many years if litigation is initiated all the way to the supreme court.

Mexico Small Flag Mexico

In terms of the applicable laws, taxpayers have the option of contesting tax liabilities before a different organ of the Tax Administration Service than the one that determined it. Nevertheless, taxpayers are not required to do so in order to have access to different stages of proceedings.

In this regard, taxpayers are entitled to challenge and request the annulment of resolutions issued by tax authorities directly before the Local or Federal Court of Administrative Justice. Likewise, in cases were taxpayers decide to challenge the relevant tax liability before the Tax Administration Service, they still have the option of filing an annulment lawsuit against the administrative resolution that confirms the tax liability that was initially determined.

Furthermore, in cases where constitutional violations are claimed to have occurred as consequence of a tax dispute, or the administrative or judicial rulings related thereto, taxpayers could be entitled to file an amparo lawsuit.

Most tax disputes could take an average of one to four years to be fully concluded, considering the stages of proceedings available both for authorities and taxpayers.

Regardless of the foregoing, it is worth noting that taxpayers that are being audited are also entitled to seek remedy before the Mexican tax Ombudsman (PRODECON). Taxpayers can request the intervention of the tax ombudsman to try and negotiate with the Tax Administration Services solutions for the tax contingencies that arise and to prevent said liabilities from escalating into litigation. Alternative means of dispute resolutions before the tax ombudsman can be sought in so far as the tax authorities have not served notice to the taxpayer of a resolution determining the existence of a tax credit.

Norway Small Flag Norway

If the taxpayer disagrees with a formal decision made by the tax authorities, the decision can be appealed to the Tax Appeal Board.

As a result of massive criticism for the lack of fair and independent treatment, the Tax Appeal Board system has recently been changed. The Tax Appeal Board will now comprise independent representatives with a minimum level of relevant competence in tax matters. For companies taxed by the Oil Taxation Authorities, there is a special Appeal Board. Due to the changes, the appeals have piled up recently, and we currently see that the processing time has increased significantly.

Norway does not have a specialised tax court. If the taxpayer disagrees with the appellate board’s decision, it is possible to appeal the decision to the Municipality Court. The deadline to initiate court proceedings is six months from the date when the resolution was sent to the taxpayer.

A judgment by the Municipality Court can be appealed to the Court of Appeal. Under certain conditions a judgment from the Court of Appeal can be appealed to the Supreme Court.

Germany Small Flag Germany

As a matter of principle, tax disputes start with a formal appeal against a tax assessment or any other tax related decision. If the tax authority does not amend or withdraw its tax assessment or decision according to the appeal, the taxpayer can dispute the tax assessment or decision in the local fiscal court or the local administrative court depending on the kind of tax in dispute. The taxpayer can appeal against the decision of both courts at the Federal Fiscal Court or to the Higher Administrative Court or rather the Federal Administrative Court. Tax disputes can easily take several years to be resolved.

Updated: October 18, 2017