Prof. Dr.

Dejan Popović

Ladies and gentlemen, dear colleagues,

Let me first welcome you again at the INTERNATIONAL FISCAL ASSOCIATION CENTRAL
AND EASTERN EUROPE TAX CONFERENCE organized by Serbian Fiscal Society (IFA
branch in Serbia) and Faculty of Law, University of Belgrade.
Our first panel on the taxpayers’ rights in CEE, co-chaired by me and assistant
professor Dr. Svetislav Kostić, encompasses the following speakers:
 Prof. Dr. Carlos E. Weffe, Scientific Coordinator of the Observatory on the
Protection of Taxpayers Rights IBFD project, Amsterdam
 Gabriela Hrachovinova, tax advisor and a member of the Presidency of the
Chamber of Tax Advisors, Brno, Czech Republic.
 Dejan Radić, Indirect Tax Authority of Bosnia and Herzegovina, Banja Luka and
 Prof. Dr. Dominik Mączyński, Adam Mickiewicz University, Poznan, Judge of
the Regional Administrative Court in Poznan, Poland
Each speaker will have app. 25 minutes for a presentation on her or his specific topic.
We will leave space for a debate between panel members as well as for a Q&A part for
the audience. We intend to finish today’s session at 5 PM in order to be able to
commence timely our planned social activities.

Before I give floor to the co-chairperson and subsequently to the panellists I would
take this opportunity to point out briefly a number of issues concerning taxpayers’
rights that some of my colleagues in Serbia and I myself consider important at this
point in time. Some of them would be certainly covered by our speakers but anyhow I
would like to table them without a pretention to elaborate them widely also bearing in
mind the Q&A part of the session.
I must agree with the statement made by Philip Baker and Pasquale Pistone that
“generally, good administration and the protection of taxpayers’ rights will go hand in
hand and support one another. Since taxpayers’ rights are derived from higher
obligations, whether in constitutional law or human rights instruments, where good
administration and the protection of taxpayers’ rights conflict, the latter should always
prevail.” The developments in last two decades have raised the awareness that
taxpayers’ rights represent a genuine part of the human rights corpus and that fiscal
interest of the state cannot justify disproportionality between their wide and tough
obligations and their rights.

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1. One of the “burning issues” is the right to privacy, including the protection of
confidential information from disclosure. Considering the massive loads of information
that tax administrations possess on their taxpayers and the sensitive nature of the
information so collected, it is a general minimum standard of all tax systems that they
take measures to provide such information with protection from any breach or misuse,
either by tax administration officials or by third parties, such as withholding agents,
that have access to the taxpayers’ information. Serbia’s law also sets forth that tax
officers and other persons participating in tax administrative procedures, tax
misdemeanour procedures, pre-investigation procedures and criminal procedures
must keep all documents, information, data, facts, data on technical inventions and
patents of the taxpayer confidential. An unauthorized disclosure represents a criminal
offence. There is a list of exceptions contained in the Tax Procedure and Tax
Administration Law when the disclosure is permitted and I will just mention one – the
obligation of the Tax Administration to publish (annually, on its website) information
on legal entities and entrepreneurs with outstanding tax debts above certain
thresholds, including the amount of unpaid due taxes and accrued interest for late
payment. Natural persons other than entrepreneurs cannot be “named and shamed”.
There are several sensitive aspects of this legal provision. It establishes, on the one
hand, certain balance between the freedom of information legislation that reflects a
desire to apply transparency so that all aspects of government activities are subject to
public scrutiny and, on the other hand, taxpayers’ interest that, because they
compulsorily supply financial and other delicate information to revenue authorities,
they should be entitled to privacy. However the exclusion of the natural persons from
the “name and shame” list may be seen as a measure aimed at protection of those
“privileged” in terms of their wealth or political status. In Italy, from 2015 onward, all
of the annual tax returns of politicians composing the Italian government (and certain
special commissioners appointed by the government) shall be accessible to everyone,
apart from certain sensible data (e.g. the place of residence, the tax code, etc.).
Additionally, one may wonder whether the disclosure of non-compliant taxpayers is
always complete and accurate or it could become selective for whatever reasons.

2. Two recent verdicts issued by the European Court of Human Rights shed a new light
on our well established perception of certain taxpayers’ rights and obligations, the first
being favourable to tax authorities, while the second seems to enhance the taxpayers’
position.

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In Lindstrand Partners Advokatbyrå AB v. Sweden, the European Court of Human
Rights dealt with the case concerned a search undertaken on the premises of the
applicant law firm by the Tax Administration in the course of audits that were being
carried out on two other companies, which were clients of the law firm. The Court
concluded that the search of the applicant’s offices was not disproportionate to the
legitimate aims pursued. The interference was accordingly regarded as having been
“necessary in a democratic society”. It followed that there was no violation of article 8
of the ECHR (Right to respect for private and family life).
Serbia’s Tax Procedure and Tax Administration Law authorises the taxpayer’s attorney,
tax advisor, auditor, as well as her/his priest and doctor to deny the Tax
Administration information on the tax relevant facts. The non-disclosure privilege
extends to their assistants. Article 93 of the Criminal Procedure Code also grants the
non-disclosure privilege to the attorneys and other persons who would otherwise
violate the duty of keeping the professional secret. One may wonder what would be
the impact of the abovementioned verdict by the ECtHR.

3. The second verdict issued by the European Court of Human Rights in Chambaz case
could trigger reviewing of the existing provision of Serbia’s Tax Procedure and Tax
Administration Law, which compels the taxpayer to hand over records and provide all
available information to the Tax Administration under the threat of a pecuniary
penalty for the tax misdemeanour. Namely, in Chambaz the Court found that the
pecuniary penalty for refusal of handing over the requested documentation violated
the prohibition of self-incrimination, which emanates from the right to a fair trial as
stipulated by Article 6 of the European Convention on Human Rights. Philip Baker
pointed out that despite the fact that in the moment when the Tax Administration
demanded the handing over of the documentation in the course of the tax audit the
issue of tax evasion was not raised, the Court took the position that Article 6 anyhow
was applicable, since subsequent procedures that eventually led to the penalization
for tax evasion had to be taken into consideration. Just to mention, tax procedures are
generally not subject to the Court’s scrutiny from the perspective of the right to a fair
trial, because a person is entitled to that right only in the determination of any
criminal charge against him/her or of his/her civil rights and obligations. However the
European Court of Human Rights in Janosevic case held that whenever in a tax
procedure, be it administrative or judicial, penalising tax surcharges were imposed on
the applicant, the proceedings involved a determination of a “criminal charge”
understood in an autonomous meaning. In other words, in these cases the right to a
fair trial does apply. Therefore, if the European Court of Human Rights finds that
handing over of documentation in the course of audit represents violation of this right

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in the form of self-incrimination, how would legislators react? One should pay
attention to the Court’s position that – in spite of the fact that the request for
surrendering documentation was made in the course of audit, before the
commencement of the criminal procedure – the taxpayer at this juncture could not
exclude scenario that any information relating to his untaxed income could
subsequently expose him to the accusation that he had committed the crime of tax
fraud and thus endanger his position in the investigation. Having said this, I just warn
the legislator that defending the taxpayer’s obligation to hand over requested
documentation against the allegation that it violates the right not to incriminate
himself/herself cannot be based merely on the assertion that it is a tax rather than
criminal procedure involved.

4. Finally, referring again to Baker and Pistone, I would comment briefly on the
taxpayer’s right to be discharged from liability to pay the tax where the tax is withheld
by a third party, such as an employer. These scholars’ warning that legal protection is
required to make clear that the taxpayer who has suffered withholding will not be
liable to tax if the third party fails to pay this over, may at first glance seem
superfluous. But a recent amendment in Serbia’s Personal Income Tax Law speaks
differently. Namely, as of 1 January 2018 a recipient of income intended to be subject
to a withholding tax (e.g. employee) is obliged to self-assess and pay the tax whenever
the withholding agent (e.g. employer) fails to carry out his duty. The employer remains
jointly and severally responsible for the unpaid tax but the Tax Administration is now
entitled to knock directly at the employee’s door. I am aware of the Italian Supreme
Court’s position that a withholding agent’s obligation to pay tax does not exclude that
the substituted taxpayer is also obliged to pay the tax jointly with the “tax substitute“.
However, I am also aware that almost 99% of the employees in Serbia are unaware of
the withholding procedure since their wages and salaries are predominantly agreed in
net-of-taxes terms and they have neither influence on, nor insight in the employers’
conduct of withholding duties. New provision enabling Tax Administration to collect
unwithheld tax and social security contributions directly from the employees thus
violates legal certainty and creates an environment where the discretion of tax
authorities may play a major role in the tax procedure bearing in mind the large
number of potentially threatened taxpayers.

Having said that, I invite Dr. Svetislav Kostić to continue chairing this Panel.