Workshop by Rolf Benz and Jasmine Cuccarède on the occasion of the ISIS) seminar on June 3 - 4, 2024 entitled "Challenges of tax procedural and criminal tax law"
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)Anna Muster is the owner of Treuhand und Revisionen AG, a company named after her. The company’s headquarters and office space are located on the ground floor of the single-family home in Spiez where Anna Muster lives with her husband, Bernd Muster. Anna Muster is the Chair of the Board of Directors. Another member of the Board of Directors is attorney and tax expert Jaël Meier. Anna Muster shares additional business premises in Thun with her.
In August 2016, Anna Muster sold a portion of the shares in Anna Muster Treuhand und Revisionen AG to Jaël Meier, giving her a 46% stake in the company. Anna Muster sold another 46% of the shares to Boring AG, controlled by Herbert Kriegelstein. As of that point, Anna Muster retained an 8% stake in the share capital of Anna Muster Treuhand und Revisionen AG. She remained Chair of the Board of Directors.
Two years later, disputes arose between Anna Muster and the governing bodies of Boring AG, which claimed at the general meeting of Anna Muster Treuhand und Revisionen AG held in the summer of 2018 that they had acquired the remaining 8% of Anna Muster’s shares and thus a majority stake. Consequently, Anna Muster resigned from the Board of Directors on September 22, 2018.
Based on an audit conducted at Anna Muster Treuhand und Revisionen AG, the Tax Administration of the Canton of Bern initiated a tax reassessment and penalty proceedings against Anna and Bernd Muster for the tax years 2010–2015. It justified this by stating that Anna Muster had received monetary benefits from Anna Muster Treuhand und Revisionen AG for several years by diverting funds for private purposes through the company’s inaccurate bookkeeping. In addition, she had recorded clearly identifiable personal expenses as business expenses. After the tax administration had requested and received documents from Anna Muster on several occasions, it prepared a provisional fine calculation as well as a list of the monetary benefits in question. To ensure her right to a fair hearing, Anna Muster was given the opportunity to comment on this, which she did in detail—now represented by attorney Fred Huber.
Subsequently, on December 3, 2019, the tax administration issued a single joint penalty assessment to Anna and Bernd Muster in the tax evasion proceedings for the tax years 2010–2015, taking the submitted comments into partial consideration, and simultaneously issued a joint additional tax assessment. The penalty notice included a detailed list of the monetary benefits received by Anna Muster.
The tax administration issued the fine to Anna and Bernd Muster jointly in a single decision and imposed it jointly on the spouses. What issues arise here?
How should the Tax Appeals Commission rule if, in a subsequent appeal and complaint proceeding, the tax administration were to concede that the issuance of the joint fine decision was improper and request that the Tax Appeals Commission separate the proceedings?
In the example just described, will the Tax Appeals Commission issue a reformatory decision, i.e., decide on the merits of the case itself, or will it quash the decision, i.e., set it aside, and remand it to the lower court for reconsideration?
In his objection, the representative, Fred Huber, requested a reduction in the monetary benefits that had been offset. Alternatively, he requested a stay of the tax evasion proceedings until the final conclusion of the additional tax proceedings and demanded access to the files. Two years later, the tax administration granted the representative access to the files and informed him that it was maintaining the monetary benefits offset, but was willing to reduce the fine multiplier to 0.75 due to the late granting of access to the files and the lengthy duration of the proceedings. In its decision, the tax authority had set the penalty factor at 1.5, based on the standard rate of 1.0, which had been increased by 0.5 due to Anna Muster’s many years of experience in the fiduciary and auditing sector.
In his subsequent statement, the representative maintained the previously requested reduction of the calculated monetary benefits. The tax administration rejected the objection on May 8, 2023, but reduced the penalty factor to 0.75 as announced.
The files in this case comprise 15 federal binders. Anna Muster’s representative requests, as part of the file inspection, that all files be delivered to his law office. The tax administration, however, takes the position that the volume of files is too extensive and that the file inspection can only take place on-site. Is the attorney entitled to have the files delivered to his law office?
On June 2, 2023, the representative, Fred Huber, filed an appeal and a complaint with the Tax Appeals Commission of the Canton of Bern, requesting the reversal of the objection decisions with costs and compensation. He justified this by arguing that the subjective elements of tax evasion had not been met. The tax administration’s assessment was based on the fact that Anna Muster had been unable to provide detailed supporting documents for the disputed entries. However, this was neither intentional nor negligent, but rather stemmed from the fact that the new owner of Anna Muster Treuhand und Revisionen AG, Boring AG, refused to release the necessary documents to Anna Muster.
Once again, Anna Muster’s representative requested the suspension of the tax evasion proceedings until the conclusion of the back-tax proceedings. Following that, the fines should be recalculated. Due to the lengthy duration of the proceedings, the very late access to the case file, and the gross violation of procedural rules, the fine multiplier should be reduced to 0.33, provided that monetary payments are still being offset at all. Anna Muster was prevented, through no fault of her own, from producing the exculpatory evidence, which must be reflected in the reduction of the fine multiplier.
How should the Tax Appeals Commission rule on the motion to suspend the proceedings?
How should the Tax Appeals Commission rule on the motion to stay the proceedings? Can Fred Huber appeal the dismissal of his motion to stay the proceedings?
During the preliminary proceedings, the Tax Appeals Commission determined that Anna Muster’s representative had not been granted access by the tax administration to two federal files containing documents related to the present proceedings. Consequently, the Tax Appeals Commission sent the two federal files to the representative’s office for review. In the subsequent exchange of correspondence, the tax administration requested, in its response, that the appeal and complaint be dismissed with costs. The representative confirmed his position.
What are the implications of the fact that the tax administration did not grant the representative access to all files? How should the Tax Appeals Commission proceed?
During her hearing on October 27, 2023, Anna Muster pointed out that all members of the board of Anna Muster Treuhand und Revisionen AG had since resigned. The public prosecutor’s office had initiated criminal proceedings against these individuals, who had managed Anna Muster Treuhand und Revisionen AG after their departure. As evidence, she submitted two orders from the Public Prosecutor’s Office of the Canton of Bern, which indicate that Boring AG presented forged share certificates at the general meeting in the summer of 2018 in order to secure the election of the persons it had proposed at the general meeting of Anna Muster Treuhand und Revisionen AG. The Public Prosecutor’s Office deemed the actions taken by the individuals elected at the general meeting held in the summer of 2018 to be legally invalid and denied Anna Muster Treuhand und Revisionen AG, as well as Boring AG, the status of private plaintiff in the criminal proceedings. Furthermore, Anna Muster stated during her questioning that a civil proceeding was also pending, concerning the reversal of the share sale, which had been ordered by the court but had not yet been implemented. In contrast, the civil proceeding brought by Boring AG against Anna Muster had ended with a decision not to proceed. The criminal proceeding against Anna Muster was still in the preliminary investigation stage.
Anna Muster’s representative declined the subsequent opportunity to submit a statement regarding the hearing transcript.
Why did the Tax Appeals Commission conduct an interview with Anna Muster in this case?
On November 3, 2023, the Tax Appeals Commission informed the representative that it was considering amending the objection decision regarding tax evasion in the tax periods 2010–2015 to the detriment of Anna Muster and increasing the fine multiplier from 0.75 to 1.5 (so-called reformatio in peius).
The representative responded within the deadline and maintained his previous statements.
What must the Tax Appeals Commission take into particular consideration when announcing a reformatio in peius?
How would the Tax Appeals Commission react if Anna Muster’s representative were to declare the withdrawal of the appeal and complaint due to the announced reformatio in peius?
On December 11, 2023, the Tax Appeals Commission issues its decision regarding the tax evasion proceedings for the tax years 2010–2015. The Tax Administration had initiated the proceedings on which the tax evasion proceedings are based on November 6, 2020.
What is the situation regarding the statute of limitations in this case?
What requirements must be met for the Tax Appeals Commission to affirm that tax evasion has been committed?
On the basis of which criteria does the Tax Appeals Commission assess whether tax evasion has occurred in this case because Anna Muster Treuhand und Revisionen AG distributed hidden profit distributions to Anna Muster, or because Anna Muster received monetary benefits from Anna Muster Treuhand und Revisionen AG by diverting funds for private purposes through the company’s inaccurate accounting?
In the present case, hidden profit distributions were already established in the legally concluded additional tax and tax evasion proceedings against Anna Muster Treuhand und Revisionen AG. As can be seen from the detailed comments on the offsets, Anna Muster disputes a significant portion of the offsets made by the tax administration. Her representative further argues that Anna Muster is in a position of insufficient evidence, as she had handed over all the supporting documents underlying the disputed entries to the new management of Anna Muster Treuhand und Revisionen AG. Following Anna Muster’s departure, the new management had contacted the tax authorities and accused her of tax evasion. Now, they are allegedly withholding certain documents from the tax authorities intentionally in order to harm her. Therefore, she should not suffer any disadvantage as a result. During her questioning, Anna Muster again pointed out the missing documents and also expressed the suspicion that the accounting records might have been manipulated by the hostile management of Anna Muster Treuhand und Revisionen AG. Furthermore, the files reveal that there are significant disputes between Anna Muster and Anna Muster Treuhand und Revisionen AG as well as Boring AG (see, among other things, the pending or partially concluded proceedings in criminal and civil matters).
Who bears the burden of proof in the present criminal proceedings?
On the basis of which criteria does the Tax Appeals Commission assess the subjective elements of the completed tax evasion? Should Anna Muster be convicted on the grounds of intent or negligence?
On the basis of which criteria does the Tax Appeals Commission determine the amount of the fines or review the appropriateness of the fines imposed by the tax administration?
On whom does the Tax Appeals Commission impose the procedural and party costs? Does it award compensation to the parties?
Now that the decision regarding tax evasion for the 2010–2015 tax periods has been finalized, the Tax Appeals Commission is reviewing the proceedings concerning back taxes for the 2010–2015 tax periods.
Which two procedural steps will the Tax Appeals Commission take first?
What requirements must be met in order for additional tax to be levied?
To what extent will the Tax Appeals Commission’s decision regarding additional tax proceedings differ from its decision regarding tax evasion proceedings?
