Put a stop to the hefty fines imposed in cases of late zero or credit declarations of withholding taxes and VAT, at a time when the declaration does not create a tax liability, requests the Standing Committee for the support of the tax policy of the Ministry of National Economy and Finance (YPETHO).
This Committee, which acts as a "link" between the Ministry and social partners on major tax policy issues, emphasizes that imposing high fines for late filing serves neither tax compliance nor the public interest. It essentially raises the issue of reviewing and reducing fines of up to €500 per violation for late filing of returns that do not result in tax liability.
The provision in question has provoked strong reactions from businesses and professionals, as it provides for the imposition of a fine of €250 or €500, depending on the accounting system used by the taxpayer (single-entry or double-entry), for late submission of VAT returns, even when these are zero or credit returns.
For example, a professional who uses a single-entry accounting system submits a late initial VAT return that is zero. A fine of €250 is imposed for this return. A taxpayer who is required to submit a VAT return and uses a double-entry accounting system submits the initial VAT return late with an amount to be refunded, faces a fine of €500.
According to the Commission, this change is a significant increase compared to the previous regime, which provided for fines of €100 or even no penalties in cases where there was no tax liability.
In particular, a fine of €100 was imposed for each violation relating to the non-submission or late submission of tax returns and information returns or failure to respond to a request from the Tax Administration.
However, the fine for late returns did not apply if the amount of tax or the additional amount of tax that the taxpayer was required to pay did not exceed €100, even if there were two amended returns, for example, as long as the additional tax did not exceed a total of €100.
Memorandum
With a view to restoring the proportionality of fines in the above cases, the Commission submitted a memorandum to the leadership of the Ministry of Finance and the Governor of the Independent Authority for Public Revenue (IAPR), proposing legislative intervention to restore the proportionality of fines in these specific cases.
The Commission points out that the imposition of new increased fines, especially when applied retroactively, raises serious issues of legal certainty. Retroactivity, as emphasized, conflicts with the fundamental principle that tax obligations must be predictable and clear to citizens.
In this context, it proposes:
- Exemption of cases where the declaration is zero or credit, provided that there is no tax liability.
- Reduction of fines in cases of multiple late zero returns with a total fine limit so that it cannot exceed the amount of ... euros (e.g., 1,000 euros).
- Application of the rule of no penalty in cases of late filing of a return, when the additional tax payable in relation to the original return, or when the tax payable, is up to €100.