Which acts are challenged by means of a quasi judicial recourse?
By means of a quasi judicial recourse of article 63 Code of Tax Procedure both acts and omissions of the Tax Authorities relating only to the taxes falling within the scope of the Code of Tax Procedure are challenged. Within this framework, not any act that results in a tax dispute in general is challenged by a quasi judicial recourse (i.e. disputes relating to municipality taxes or custom duties). Further, certain tax acts and omissions (e.g. acts and omission in relation to the measures taken for safeguarding the public’s interest, the non granting of a tax clearance certificate due to tax debts, the temporary closing down of business sites due to tax violations) are challenged directly before the competent administrative court, without the prior filling of quasi judicial being a prerequisite. In addition, imputation acts (or omissions) related to the taxation of inheritance, donation etc, are challenged by means of a quasi judicial recourse provided that they have been issued (or not, in case of omissions) from 1.1.2015 and onwards (article 72 par. 29 Code of Tax Procedure).
Under the current tax legal framework, the quasi judicial recourse can be submitted against both explicit acts and tacit rejections of the Tax Administration. Such tacit rejections shall be challenged upon the expiry of the time granted to the administration by the law to
perform an act (or, if such time is not granted, three-months following the submission of an application by the taxpayer).
The submission of a quasi judicial recourse is mandatory for the review of the acts or omissions that it concerns. Therefore, the filing of any other administrative recourse, including a judicial recourse is inadmissible and as such shall not incur any legal consequences (i.e. interruption of time limit). For this reason it has been argued that the tax authority upon issuing an act shall be under the obligation to adequately inform the taxpayer for their right to file a quasi judicial recourse against the imputation act.
Filing of a quasi judicial recourse
The quasi judicial recourse is submitted within 30 days following the date of the notification to the taxpayer of the act or the date the omission is considered to having taken place (i.e. upon the expiry of the time granted to the administration by the law to perform an act), before the tax authority which has issued (or failed to issue) the act concerned. This time limit is suspended from 1 to 31 of August. It should be emphasized that there is a “presumption of lawful notification” of the act (and thus a starting point for the aforementioned 30- days deadline) after the lapse of fifteen (15) days from the date that a registered letter has been sent to the taxpayer’s last known (to the tax authority) address.
Along with the quasi judicial recourse the following should be further submitted:
- all documents supporting the taxpayer’s claims and arguments (in hard copies);
- an electronic file (in USB or CD) including scanned versions of i) the quasi judicial recourse, ii) the supporting documents mentioned under (a) above and iii) the application of payment suspension (if separately submitted);
- a solemn declaration certifying the validity of the documents included in the electronic folder.
Who is entitled to submit a quasi judicial recourse (locus standi)?
The persons entitled to a quasi judicial recourse are the following:
- the person against whom the imputation act has been issued.
- any third parties, being jointly and severally liable along with the obliged person (i.e. persons held jointly and severally liable along with the legal entity such as chairmen, directors, administrators, managing directors, liquidators having this capacity at the time of the entity’s merger or dissolution, as well as shareholders or partners possessing at least 10% of the entity’s capital at the time of the entity’s dissolution).
Which options are available to the taxpayer in order to suspend the payment and the execution procedure for the payment of the assessed tax amount?
The mere filing of a quasi judicial recourse does not suspend the payment and the execution procedure of the tax amount imputed with the challenged act. However, under article 63 of the Code of Tax Procedure the tax payer might be granted a (partial or total) stay of payment and execution a) either by paying the 50% of the imputed tax amount, after which a suspension for the remaining 50% is granted (“automatic suspension”)1, or b) by filing an application for suspension, either incorporated or separate to the quasi judicial recourse,
provided though that both documents are submitted before the tax authority at the same day2.
In order for a suspension to be granted, it is assessed whether the payment of the imputed tax amount will result in an “irrevocable damage” for the taxpayer; therefore, even the fact of the obvious validity of the quasi judicial recourse is not taken into account. A positive decision on the suspension application shall remain into force until the issuance of a decision on the extra-judicial recourse or its tacit rejection. The Dispute Resolution Directorate has thirty (30) days to issue a decision on the application for the suspension of payment, otherwise it is considered as tacitly rejected. No judicial remedy can be filed against the negative decision or the non – issuance of a decision on the application for suspension.
Decision on the extra – judicial recourse – Appeal before the Administrative courts
Following the above submissions, the Dispute Resolution Directorate has one hundred and twenty (120) days to issue its decision on the extra-judicial recourse (the time limit is suspended from 1 to 31 of August). Such decision should be notified to the taxpayer through any plausible means in order for the latter to have acquired full knowledge of the decision’s content. In the event that a decision is not issued within the aforementioned deadline, the remedy is considered as tacitly rejected. In this case, the taxpayer is deemed to have acquired full knowledge of the tax authority’s (tacit) rejection merely by the lapse of this 120- days deadline.
The Dispute Resolution Directorate normally proceeds with the review of the legal issues and of the factual background invoked with the quasi judicial recourse. Following such review it shall either (in whole or partially) abolish or confirm the disputed act by means of a decision accepting or rejecting respectively the quasi judicial recourse. The decision that partially or wholly accepts the quasi judicial recourse and thus abolishing the disputed act, should be adequately reasoned by the Dispute Resolution Directorate whereas the decision rejecting the quasi judicial recourse merely repeats the results of the audit report on which the disputed act was based.
It should be noted that against the decision or the tacit rejection of the Dispute Resolution Directorate, the taxpayer is entitled to lodge a recourse before the competent administrative court. On the contrary, the administration does not have the right to challenge the decisions of the Dispute Resolution Directorate through any means.
Judicial recourse
As mentioned above, upon a negative decision on or a tacit rejection of the quasi judicial recourse, a recourse shall be filed by the taxpayer within thirty (30) days following the notification of the decision or the lapse of the 120-days without the Dispute Resolution Directorate having issued decision. The 30-day time limit is suspended from 1 to 31 of August. For acts and omissions that are obligatory challenged by means of a quasi judicial recourse, only the decision or the tacit rejection of the Dispute Resolution Directorate, as the case may be, is challenged by the taxpayer and not the original act (or omission) of the tax authority itself.
Competent courts – Subject-matter and local jurisdiction
The adjudication of a recourse belongs to the ordinary administrative courts of law (i.e. the Administrative Court of First Instance and the Administrative Court of Appeal). More specifically, regarding the pecuniary disputes the subject-matter jurisdiction is determined as follows: a) for disputes not exceeding the amount of € 60,000 competent is the Single – Member Administrative Court of First Instance (Its decisions are subject to appeal before the Single-Member Administrative Court of Appeal), b) for disputes exceeding the amount of € 60,000 and up to € 150,000 and for disputes of non pecuniary nature competent is the Three – Member Administrative Court of First Instanceand c) for disputes exceeding the amount of € 150,000 the first and last instance adjudication belongs to the sole competency of the Three-Member Administrative Court of Appeal.
It should be noted that the subject-matter jurisdiction is determined on the basis of the amount of the main tax, duty, fee or fine and not on the total imputed amount (including surcharges, interests etc.). In addition, in the event that the pecuniary dispute is the result of an imputation or any other assessment act by virtue of which different amounts have been imposed against the same obligor (i.e. taxpayer), the subject-matter jurisdiction is determined on the basis of the highest of the amounts imposed. Further to the above, if, as a result of the same, provisional or final, tax audit, different amounts for the same fiscal year, or administrative period, have been assessed, either by the same or different acts and against the same tax payer, the Administrative Court of Appeal shall be competent for their adjudication, provided that at least one of the disputed amount falls within its competency in accordance with the aforementioned (i.e. amount exceeding € 150,000).
Further, as mentioned above, the non-pecuniary tax disputes shall be referred to the Three- Members Administrative Court of First Instance while disputes arising from article 46 of the Code of Tax Procedure, article 153 L. 2960/2001 (i.e. enforcement measures for the collection of tax debts) and article 1 para. 4 (c), (d) and (e) of L. 1406/1983 (i.e. disputes with regard to the non issuance of a tax clearance certificate due to tax debts, with acts ordering the temporary closing down of establishments due to tax violations or tax debts and with the refusal of approval of tax books and record respectively) fall within the competency of the President of the Administrative Court of First Instance, who resolves irrevocably on the relevant matter.
In relation to the local jurisdiction, competent is the court (either the Administrative Court of First Instance or the Administrative Court of Appeal) in the district of which the tax authority having issued the originally disputed act is situated (and not the district where the Dispute Resolution Directorate of the Sub-Directorate is located).
Which persons are entitled to file a recourse (locus standi)?
The right to file a recourse is granted to those having a direct, personal and existing legitimate interest or being entitled to such a right by a special provision of the law. In general, a legitimate interest exists when the challenged act has caused material or moral damage to the applicant and the latter undergoes that damage due to his/her capacity (CoS 2998/1998). Specifically in relation to the tax disputes, the persons (including legal entities) having a direct, personal and existing legitimate interest to file a recourse are those explicitly mentioned within the challenged act (assessment act, imputation act etc) either being directly liable for the payment or bear joint liability along with the person directly liable or have personal tax obligation based on a specific provision of the law. Within this framework, persons having an additional joint and several liability for the payment of the imputed amount (i.e. in relation to legal entities: directors, presidents of the BoD, managing directors, administrators liquidators, shareholders representing more than 10% of the company’s share capital) since the entry into force of the existing Code of Tax Procedure (1.1.2014) are explicitly granted the right to challenge the tax authority’s act by means of a recourse. More specifically the law provides that these persons are entitled, along with the legal entity, to exercise against the tax authority any right that the legal entity would have at its disposal3.
Judicial fees
It is noted that in case of pecuniary tax disputes, for the filling and the hearing of the case, the applicant must pay a judicial fee, which equals to 1% of the amount of the dispute, otherwise the recourse is rejected as inadmissible. If the amount of the said fee exceeds
€ 15,000, then an amount of € 3,000 is paid and the rest of the amount is ordered to be paid by the decision of the Court on the recourse, if the latter is rejected (if the recourse is accepted, the amount already paid is refunded to the applicant). 1/3 of the fee is paid upon filling of the recourse and the rest 2/3 of the fee is paid by the day of the hearing at the latest.
In case of non-pecuniary tax disputes a fixed fee of € 100 is provided for the filling of the recourse.
Does the filing of a recourse suspend the payment and the execution procedure of the imputed amount?
In general, in accordance with the Code of Administrative Procedure, with regard to tax disputes, the time limit for filing a recourse as well as the filing itself suspends the execution of the disputed act, unless otherwise provided a specific law provision. Further to the above, the Code of Tax Procedure as currently in force stipulates that, with regard to the suspending effect of the appeal’s filing, the provisions related to the quasi judicial recourse shall apply mutatis mutandis. Therefore, along with filing a judicial recourse the tax payer shall be granted a suspension for the 50% of the imputed amount (although the 100% of it has been assessed) provided that the remaining 50% has been already paid.
Moreover, along with the filing of the recourse the taxpayer is also granted the right to submit a motion for stay of execution of the disputed act before the court competent for the adjudication of the appeal. Such motion might be accepted either a) in case that the enforcement of the disputed act is able to cause any kind of material or moral damage to the applicant, provided that the restoration of such damage would be impossible if the appeal is finally admitted or b) if the appeal is considered as “obviously valid” (the mere probability of its validity is not sufficient) irrespective of the fact whether the enforcement of the disputed act will result in any damage for the applicant or not.
In case that a motion for the stay of execution of the disputed act is granted and in order for the public’s interest to be safeguarded, the court may rule that the suspentive result of the decision applies only to specific measures for the payment of the debt of to specific assets of the applicant.
What is the scope of the judicial control conducted by the court?
The competent court (either the Administrative Court of First Instance or the Administrative Court of Appeal) for the adjudication of the recourse shall not be limited to a legality control of the contested act. On the contrary, the court should proceed with a review of the disputed act both on the merits and in relation to its compliance with the law however within the limits set out by the appeal’s petition. However, the court has the authority, on its own initiative, to control the infringement of “res iudicata” regarding the specific case brought before it, even though such a request is not included in the recourse.
Furthermore, within the framework of its review, the court has the authority to annul the contested act due to its contravention with a provision regulating its typical form or its issuance procedure however only in the case that the applicant invokes and proves damage which cannot be otherwise restored but only thought such annulment. If by means of the recourse a default of a due legal action on behalf of the tax authority (i.e. omission) is challenged, then the court has the competency either to cancel such default / omission (partially or in whole) or to dismiss the appeal. It should be pointed out than in general the court is prohibited from deteriorating the applicant’s status, without prejudice though to specific cases where such deterioration is “permissible” under the law (i.e. the disputed act has been issued by an incompetent authority, if there is an infringement of an essential procedural requirement pertaining to the act’s issuance etc).
Right to appeal against the Judgment of the Court of First Instance
For those cases that are not irrevocably resolved by the competent administrative court (either the administrative court of Appeal or the President of the Administrative Court of First Instance) and the relevant dispute exceeds also the amount of € 5,000, an appeal may
be filled before the Administrative Court of Appeal of the district of which the Court of First Instance having issued the appellate decision is situated.
The right to file an appeal is granted to any party of the case before the Court of First Instance having a legitimate interest thereto (i.e. the unsuccessful party). The appeal shall be filled within 60 days after the decision of the Court of First Instance is served to the party entitled to appeal. This time limit is suspended from 1 to 31 of August.
It should be noted that in case of pecuniary tax disputes, the appellant is obliged to have paid 20% of the disputed main tax, duty, fee or fine before the day set for the hearing of the appeal otherwise the appeal shall be rejected as inadmissible, unless the appellant is granted by the Court of Appeal a suspension of the execution of the first instance decision. The suspencion may be granted under the conditions described above.
Any legal or material defect of the first instance decision as well as the omission of the Court of first instance to review what the Court was obliged to review on its own initiative (i.e. possible the infringement of “res iudicata” regarding the specific case) may constitute a reason to appeal.
The object of the dispute is not allowed to be changed before the Court of Appeal. However, the appellant has the right to invoke new factual allegations in connection with aspects of the case that have been already disputed before the Court of First Instance.
The appeal has a transmissive effect, that is the case is examined by the court of the second degree of jurisdiction ab initio only as to the parts as to which the first-instance decision has been challenged by the appeal. However, in the case of a decision on a recourse, the court, proprio motu, examines whether there is a violation of a res judicata.
The aforementioned regarding the obligation for payment of a special judicial fee equal to 1% of the disputed amount applies also for the filling of the appeal.
Petition for cassation
In case of rejection of the appeal before the Administrative Court of Appeal, a petition for the cassation of the case may be filled before the Council of the State (i.e., the Supreme Administrative Court). Such a petition may also be filled with respect to the cases, which are irrevocably resolved by the competent administrative court of first instance (disputes over € 150.000, that are referred directly to the Administrative Court of Appeals, cases before the President of the Administrative Court of First Instance).
A cassation may be brought by the person who was a litigant in the trial in which the judgment subject to appeal was pronounced and who is harmed by it, provided that the object of the dispute exceeds the amount of € 40,000. The harm to the litigant may be occasioned either by the operative (adjudication) part of judgment, and in this case, the litigant who has been defeated has a locus standi, or by its ratio decidendi. Litigants are, on the one hand, the person who has sought the judicial protection by the filing of a remedy before the competent administrative court (recourse, appeal, intervention), and, on the other, the State or any other public legal person to which the organ whose act or omission has caused the administrative dispute belongs. A petition for cassation may also be filled by the minister who is the hierarchical head of the authority whose act or omission has caused the substantive administrative dispute.
Another condition of admissibility of the petition for cassation is that either there is not any case law of the Council of State on the crucial legal matter or that the appealed decision is contrary to the case law of the Council of State or of any other Supreme Court or an irrevocable decision of an administrative court.
The petition for cassation must be lodged within a peremptory time limit of 60 days, which is extended by another 30 days for persons residing abroad. The event which triggers the time limit is the service (made by the court which has pronounced the judgment) of the decision subject to appeal to the litigant who originally had recourse to the administrative court in order to seek judicial protection, or to the State or the public legal person whose act or omission is contested. The said time limit is suspended from 1 to 31 of August. The right to file a petition is lapsed three years following the pronouncement of the appealed decision. The time limit and the lodging of the petition of the cassation do not entail a stay of execution of the appealed decision.
The petition for the cassation of the case is allowed exclusively on legal grounds, i.e. the merits of the case shall not be reviewed by the Court.
Grounds for cassation are:
- excess of powers or lack of competence ratione materiae of the court which issued the decision subject to appeal;
- unlawful constitution or composition of the court;
- violation of a substantive norm of the procedure;
- erroneous interpretation or incorrect application of the substantive law governing the case;
- the existence of two or more contradictory final decisions on the same case between the same litigants.
The listing by the legislative provisions of the grounds for final appeal is restrictive. Grounds for cassation which are not included in this provision are dismissed as inadmissible.
If the petition is accepted, the quashing judgment of CoS rescinds the court judgment which has been challenged and the litigants revert to the procedural situation which existed before this court judgment was pronounced. If the judgment was quashed because of the lack of competence or unlawful constitution or composition of the court which pronounced it, the case is referred, respectively, to the competent court or the same court, so that the latter can adjudicate with a lawful composition or constitution. If the factual circumstances need to be clarified, the case is referred back to the court which pronounced the appealed judgment for a re-examination on the merits. The court to which it has been referred adjudicates again the substance of the case, however without being able to deviate from the quashing judgment with regard to the matters which have been ruled by the CoS. If the factual background on which the judgment which has been quashed is based does not need clarification, the CoS itself may adjudicate on the case. If a judgment has been quashed, any other judgment based upon it is also subject to a petition for cassation.
1. Such payment may take place until the expiry of the 120-day period, within which the Dispute Resolution Directorate has the right to issue its decision.
2. It is however argued that such requirement shall be considered as too restrictive especially in the event
that the extra-judicial recourse is filed prior to the expiry of the 30-days-deadline. Therefore, for as long
as the said deadline has not lapsed, the taxpayer is unlawfully deprived of his legal right to apply for a
suspension of payment
3. Pursuant to recent case – law, jointly liable persons are however not entitled to further dispute the decision
of the Dispute Resolution Directorate on the relevant recourse before the competent court..
