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Provision of judicial tax expert services – part two

In our first article, we looked at the work of judicial tax experts and their role in our legal system, whether it is an administrative, civil or criminal case, or a simple dispute between two parties. We looked at the difference between seconded and contracted work.

In the second part, we will look at the practical side of expert work, with a few examples. We briefly present issues and cases where the involvement of a judicial tax expert assisted to resolve the case in a professional and overall cost-effective manner, avoiding time-consuming litigation.

Example of specific expertise in estimating the tax base

In many situations in business life, the tax authority may conduct an investigation of a taxpayer who carries out an activity that is specific to his or her profession or business. If the unique nature of the business is not negligible, it should be taken into account, for example, when estimating the tax base. Clarification of this may require specific expertise, which may necessitate the appointment of an expert in the relevant tax field if it is relating to VAT, corporate income tax or personal income tax. In a number of cases, an expert has assisted, for example, in the review of a complex VAT apportionment method.

Transfer pricing as a special area of taxation

It is also good to know that the involvement of an expert can be initiated in a procedure by the tax authority, but also by the taxpayer itself. In fact, the taxpayer may also propose the expert in a transfer pricing case, for example, if it is of the opinion that specific transfer pricing expertise is required. The taxpayer may have good reason to do so - which has already happened in several court cases - for example, if the tax authority is investigating a complex transaction between related parties e.g. being a licensing, financing transaction or sale of goods, supply of services.

In such cases, an international database search can be used to make a well-founded case and, for example, to find comparable contracts or, where applicable, comparable companies, which can help to convince the tax authority or the opposing party regarding the correctness of the corporate income tax or local business tax base and the innovation tax base, thus preventing the assessment of tax shortage and significant penalties.

Determining the value of companies, or estimation of profits not generated or damages

In many cases, a tax expert or an auditor may be delegated when the market value of a company's shares, participations or assets needs to be determined. The purpose of this may be, on the one hand, to establish whether tax avoidance has taken place in relation to companies or even individuals. In such cases, the expert will consider the particularities of the company or asset in question and, on the basis of all the circumstances of the case, determine the valuation method or set of methods (for example, by weighting several methods) by which the market price can be determined.

On the other hand, it is very common for an expert to be appointed in matrimonial property division cases, so that the court can decide on the correct division of the property involved. In such cases, the expert can assist the court in "deciding" the dispute between the parties on the basis of facts and data, based on calculations that are well known in the profession (the role of the judge of facts).

It also happens that in a compensation case, the expert helps to determine the amount of lost profit or damage, for example in relation to an activity, using well-known economic method(s).

Summary

As can be seen, the range of cases in which the involvement of a judicial tax expert can be useful in resolving a dispute can be extremely wide. It may therefore be worthwhile to consult such an expert if you have a different view on a tax issue from the opposing party being a company, an individual or the tax authority.

Finally, we would like to draw our readers' attention to the fact that the court may not avoid the appointment of a judicial tax expert if it is necessary for the resolution of the dispute and the legal conditions for his/her appointment are met.

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