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The CoS decision on unjustified increase of property


As a follow-up to our previous Sunday's article, we summarize and simplify the main points of the recent important decision of the Council of State (CoS 3071/2017), which taxpayers need to take into account regarding "unjustified increase of property", which may arise after a tax audit.

In particular, the decision concerns remittances made by a taxpayer (natural person) in June 2010 from a bank in Greece to a foreign bank. The partial tax audit carried out in 2014 by the Tax Audit Service for High Net Worth Individuals (KEFOMEP) considered that part of the remittance was not covered by the income of the audited and levied on it, an extraordinary solidarity levy and the corresponding increments.

The Council of State considered (as in previous relevant cases) that although the provisions for the increase of the property have been in force since 30/9/2010 with paragraph 3 of Article 15 of Law 3888/2010, they can also be applied in cases in which the increase of property in question occurs in a period prior to 30/9/2010. This, of course, provided that, during the relevant period, the statutory time-limit for the imposition of a tax has not expired.

In principle, the CoS also considered as decisive not the time of the transfer, but either the time at which the amount in question was deposited (or, in the case of a partial deposit, the time of deposit for each part), on the bank account of the holder, through which the remittance was made, or the earlier period during which the corresponding increase in its assets occurred, such as the time when the amount (or part of it) was deposited in another bank account of the same person, from which the amount in question (or part of it) was transferred to the account through which the remittance was made.
The court must annul the improper account of the audit authority if it considers that the increase of property in question as a whole did not arise during the remittance management period.

On the other hand, if it considers that the increase in question was only partly during the abovementioned management period, the court will reform the contested act.

In order for the Court to consider and give a ruling on the case, the taxpayer must substantiate with specific arguments that for each grounds a specific legal issue arises, namely questioning the interpretation of a provision of law or a general principle of substantive law judged by the contested decision, that at the time of the application there was no case-law of the court to settle the matter and the amount of the difference was more than EUR 40,000.

This means, among other things, that similar cases cannot be brought before the CoS if it is judged that there are decisions resolving the case in question.

It should also be noted that in order for the CoS to determine the amount of "unjustified increase of property" accepted the funds of past years for consumption and the tax assets of the taxpayer on 31 December 1999 for which bank statements were presented.

In this case, the concept of money included investment products such as bonds, shares, repos, mutual funds, etc. whose existence on 31 December 1999 was confirmed by supporting documents and which were liquidated before the transfer took place.

It is understood that the dates on which cash can be accepted by the tax audit are differentiated according to the audited year and the existing decisions on the limitation of the government's right to tax.

G. Samothrakis, J. Panou
Posted on Sunday newspaper "KATHIMERINI", on 25/02/2018