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Tax Advisor Maret Hallikma represented successfully Estonian Post Ltd., whose claim concerning annulment of notice of assessment of the Tax and Customs Board in more than 7 million kroons was fully satisfied by Tallinn Administrative Court
Maret Hallikma, Tax Advisor of Lepik & Luhaäär LAWIN, represented successfully Estonian Post Ltd. upon preparation of the claim and further proceeding with regard to the notice of assessment, whereby tax authority demanded from the company additional taxes over 7 million kroons. Northern tax and customs centre of the Tax and Customs Board conducted in September 2006 the tax audit for checking the calculation, declaration and correctness of payment of value added tax, income tax and social tax by Estonian Post Ltd. in 2005. Arising from the tax audit conducted, Tax and Customs Board came into the conclusion that the postmen acting as self-employed persons work in reality for the comapny under the terms corresponding to the characteristics of employment and Estonian Post Ltd. should have paid all the employment-related taxes, i.e. Estonian Post Ltd. should have withheld income tax, unemployment insurance and pension contributions and paid social tax from the wages as well. On 10 October 2007 the tax authority made a decision, pursuant to which Estonian Post Ltd. was obliged to pay additional taxes over 7 million kroons and against with the company filed a claim in the court. Last week Tallinn Administrative Court satisfied fully the claim of Estonian Post Ltd. and annulled the respective notice of assessment of Northern tax and customs centre. Therefore, Estonian Post Ltd. is not obliged to pay the tax amount over 7 million kroons and can further hire the postmen as self-employed persons instead of entering into employment agreement. According to Maret Hallikma, Tax Advisor of Lepik & Luhaäär LAWIN, this dispute concerns among other things an issue of principle which is essential in many other tax issues as well - are there restrictions with regard to the right of tax board to revalue the transactions executed between the parties (so-called principle of economic interpretation) and if yes, then to which extent? Tallinn Administrative Court decided in this matter that such right is restricted and the tax authority has "infringed the freedom of agreement and business of Estonian Post Ltd. in a disproportional and unfounded matter", intervening without basis the civil law relations entered into between Estonian Post Ltd. and self-employed persons.
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