Tax Prescription under the LGT: A Detailed Overview

Tax Prescription under the LGT

Introduction

Tax prescription is a legal institution that governs the loss of rights due to non-exercise within a specific period. It balances the principles of justice (right holders exercising their rights) and legal certainty (diligent exercise of rights to limit uncertainty). This overview focuses on Articles 66 to 69 of the LGT, detailing the key aspects of tax prescription.

Article 66: Limitation Period and Prescribed Rights

Article 66 establishes a four-year limitation period for the following rights:

• The Tax Administration's right to determine tax liability through timely settlement.
• The Tax Administration's right to demand payment of settled and self-assessed tax debts.
• The right to request refunds (as per tax regulations), income returns, and improper reimbursement of guarantee costs.
• The right to obtain refunds (as per tax regulations), repayment of undue payments, and reimbursement of guarantee costs.

Articles 67 and 68 provide further details on calculating the statute of limitations, addressing:

1. The starting point of the limitation period.
2. Actions by the Tax Administration or the taxpayer that interrupt the prescription period.
3. Consequences of such interruptions.

The limitation period generally begins the day after the reporting period, settlement, payment, or refund request.

Article 68: Interruption of Limitation Periods

Article 68 details the causes of interruption, referencing the classifications of rights and assumptions in Articles 66 and 67. Generally, interrupting actions are those taken by the Tax Administration or the taxpayer, with reliable and formal notification to the recipient, aimed at recognizing or exercising rights or enforcing obligations. Actions related to complaints, appeals, and court proceedings also interrupt the limitation period. Article 68 also states that the limitation period restarts after an interruption.

Articles 69 and 70: Extent and Effects of Prescription

Article 69 states that prescription applies automatically, even if the tax debt is paid without the taxpayer claiming exceptions. The prescribed tax debt is extinguished. Article 70 addresses the effects of prescription on formal obligations, stating that formal obligations related to tax obligations are required only until the right to determine the latter expires.