If the taxpayer fails to comply with taxation obligations (reporting, making statements, tax assessment, tax returns, tax payments, issue of documents, keeping records) they can expect the sanctions set forth in the Act on the Rules of Taxation. Some cases not only entail the consequences specified in the Act on the Rules of Taxation, but also those set forth in the Act on the Criminal Code.
If the National Tax and Customs Administration (NAV) establishes a tax shortfall as part of a tax inspection, the taxpayer can expect criminal law consequences in addition to taxation law consequences under certain circumstances. Below we discuss these circumstances and their implications for criminal law as well.
Act C of 2012 on the new Criminal Code (hereinafter referred to as: “Btk.”) slightly amended the concept of and sanctions on fiscal fraud applied up until now. Based on the Btk. anyone who deceives or keeps others deceived in relation to fiscal payment obligations or funds originating from the budget, makes a false statement, conceals facts, or makes unlawful use of discounts related to payment obligations commits fiscal fraud.
Section 396 of the Btk. punishes fiscal fraud depending on the amount of the pecuniary damage and the way the crime was committed as follows:
• causing pecuniary damage (HUF 50 – 500,000) may be punished by imprisonment of up to 2 years;
• causing large pecuniary damage (HUF 500,000 – HUF 5 million) or committing fiscal fraud in a criminal conspiracy or in a business-like manner resulting in pecuniary damage may be punished by imprisonment of up to 3 years;
• causing significant pecuniary damage (HUF 5 – 50 million) or committing fiscal fraud in a criminal conspiracy or in a business-like manner resulting in large pecuniary damage may be punished by imprisonment of 1 to 5 years;
• causing extraordinarily large pecuniary damage (HUF 50 – 500 million) or committing fiscal fraud in a criminal conspiracy or in a business-like manner resulting in significant pecuniary damage may be punished by imprisonment of 2 to 8 years;
• causing extraordinarily significant and large pecuniary damage (in excess of HUF 500 million) or committing fiscal fraud in a criminal conspiracy or in a business-like manner resulting in extraordinarily large pecuniary damage may be punished by imprisonment of 5 to 10 years.
The punishment of a person reimbursing the pecuniary damage caused by fiscal fraud up until the submission of the indictment may be alleviated to an unlimited extent, except in the case of fiscal fraud committed in a criminal conspiracy or in a business-like manner.
The Act on the Rules of Taxation specifies a statute of limitation on the right for tax assessment, based on which such right lapses 5 years after the last day of the calendar year in which the tax return or declaration should have been filed. However, in the event of fiscal fraud, the tax assessment right shall not lapse until the statute of limitation for the crime lapses.
The legislative bills of taxation approved by Parliament for 2014 contain further stricter measures, according to which the lapse of the right for tax assessment during a criminal procedure shall be suspended from the start date of said criminal procedure until it finishes with a final ruling. In practice, this means the 5-year limitation period pertaining to the right for tax assessment will be extended by the period for conducting the criminal procedure, which can mean several additional years.
