Even if you handle your tax issues with the utmost care and use the tools provided by law (e.g. self-revision, cooperative procedure) you can still encounter legal disputes in relation to NAV procedures. However, taxpayers are not defenceless against adverse procedures or decisions, there are a number of legal remedies (appeals, supervisory action, judicial reviews) available. In this article we present the most basic rules applicable for simple cases.
As a primary tool of legal remedies, an appeal against a resolution made by the given NAV County Directorate must be submitted to the County Directorate where the decision was made, but addressed to the tax authority of second instance (NAV Appellate Directorate). Generally, the deadline for an appeal is 15 days from the notification date of the first-instance resolution (30 days in the case of a retrospective tax assessment). As a rule, an appeal is a prerequisite for a judicial review, which means an appeal must be submitted against the adverse NAV decision in order to open up the possibility of going to court. The appeal must include the reason and the extent to which we disagree with the NAV’s opinion. The Appellate Directorate examines the appealed decision as well as the entire procedure conducted before the decision, ignoring who lodged the appeal and why. Before submitting the appeal it is useful to know that there is a fee (which ranges from HUF 5,000 to HUF 500,000 – from approx. EUR 16 to EUR 1,600) and that the resolution made as a result of the appeal can be more serious for the appealing entity than the first-instance resolution.
An application for supervisory action can be lodged against the final resolution to the superior tax authority (in the case of the NAV’s Appellate Directorate, the superior body is the NAV’s Central Directorate). Supervisory action can also be taken ex officio. There is essentially no deadline for supervisory action, this can happen at any time during the statute of limitation period. Submitting an application for supervisory action is not necessarily ruled out by filing a legal action either, the two legal remedies can be conducted at the same time. Although the superior tax authority may, reject an application for supervisory action without any substantive investigation, if the taxpayer initiates the judicial review then under customary law the application is generally not rejected. The fee applied for supervisory action is the same as that for an appeal. One major difference compared to the rules of appeal is that because of the application for supervisory action, no decision can be made that changes the tax liability to the detriment of the taxpayer. If there is cause to adopt a more serious decision for the taxpayer, the unlawful resolution is annulled and new proceedings are launched, during which all the legal remedies become available again.
Legal action submitted to a court falls under legal remedies guaranteeing the fair and lawful operation of tax administration. The action must be filed at the first instance tax authority, with reference to the violation of the law, within 30 days of the notification of the second instance resolution (when it becomes final). At the same time, the action can request that the enforcement of the tax authority resolution be suspended. During the lawsuit the court is bound by the action, so the decision made by the tax authority may not be more serious; however, if the case is lost, fees and court costs need to be paid. Court proceedings are generally long and demanding, and statistics show that a high percentage of the cases are won by the NAV, but in the case of new and non-standard tax issues, it is always worth considering legal action.