Leadell Pilv has successfully represented K. Kesalo, a former board member of an Estonian company, in a tax dispute in Tartu Administrative Court.
According to Leadell Pilv, the Tax and Customs Board (TCB) of Estonia "made a decision about the liability of [Kesalo] in amount of approximately EUR 26,000, stating that the VAT and income tax debt was caused during the time when [he] was a board member and due to his intentional activities to reflect incorrect data in the tax calculations regarding the fictional transactions of purchase and sale of sugar. As a result, the payable tax obligations were incorrectly declared. Since the TCB was unable to claim from the company the debt determined by the tax decision, the decision ... was made about the liability of the board member at the disputable period. [Kesalo] disagreed with the decision and submitted an appeal to the administrative court."
On October 5, 2016, the Tartu Administrative Court granted Kesalo's appeal, annulled the lower court's decision, and ordered the TCB to cover the procedural costs of the client in amount of almost EUR 4,000. The court found that the TCB had not proven that Kesalo had intended to violate the tax law. According to Leadell Pilv, "in the worst case the activity of the client could be considered as gross negligence upon fulfilling the obligations of a board member. But since the 3-year term applicable for gross negligence had already passed by the time of making the decision, the decision was illegal and subject to be annulled."
The tax authority did not appeal the decision of the administrative court and it has entered into force.
The Leadell Pilv team representing Kesalo was led by Partner Jaak Siim.
