The Tax Authority doesn’t just call to ask how you’re doing. And if you’ve received a VAT assessment – that is, a demand for payment based on the authority’s assessment (and not based on a report) – it’s a sign that something in the harmony between your business and the state has gone wrong. Sometimes it’s their mistake, sometimes it’s a problem with you, and sometimes – it’s simply a different interpretation of reality.
But it’s important to understand: An assessment is not a ruling. It’s an initial proposal from the Tax Authority, which is permissible and even desirable to appeal. Just not in every way. And of course – not alone.
What is a VAT assessment anyway – and why did you receive one?
In cases where the Tax Authority believes that the reports you submitted are inaccurate, incomplete, or incorrect, it may determine for you the amount of VAT you must pay. Instead of relying on what you reported, it makes its own assessment – usually a strict one.
The causes of moles are varied:
- Conflicting reports between VAT and Income Tax
- Material gaps between revenue cycle and expenses
- Findings from a book review or investigation
- External information that came to the Authority – sometimes from very surprising sources
So what do you do when it lands in the mailbox?
In most cases, the initial reaction will be a slight shock, perhaps a shout at the accountant, followed by a nervous flip through the documents. But this is exactly the moment when it is important to stop – and do the right thing.
Step One: Don’t Panic (But Don’t Ignore Either)
A VAT assessment is a document that starts a clock. From the moment you receive it, you have only 30 days to file an objection. If you do not do so, the assessment will become final, meaning that it will no longer be possible to appeal it, and it will be translated into actual payment, including fines and interest.
Step Two: Integrated Legal and Professional Advice
From here, it is not just an accounting matter. Lawyers who specialize in taxation – and especially VAT – know how to identify fundamental failures in the assessment: defects in the procedure, methodological errors, excess of authority, or poor interpretation of facts. In collaboration with a tax advisor or CPA who is familiar with the case, an effective line of defense can be built.
Step Three: Submitting a well-organized and reasoned objection
The conclusion is not an “explanation.” It is a legal accounting document. It should include:
- Details of the dispute
- Legal analysis of the relevant legal provisions
- Evidence, documents, opinions – as much as possible
- A justification for each component of the assessment that you do not accept.
- Presentation of a different thesis for the determination of the authority
And another small thing: it’s important not to write things that are not based on facts. Any inaccurate claim could weaken the entire process.
And what happens after the achievement is submitted?
- Decision within a year – The tax authority is obligated to give you a refund within a year. In practice? Sometimes it takes much less, but this time is critical for organizing.
- The decision itself – Can include full acceptance, partial acceptance, or full rejection of the achievement. Sometimes a compromise may be offered, especially in borderline cases.
- If the achievement is rejected – you can appeal to the court – here you enter the world of tax litigation in every sense: filing an appeal to the district court, conducting hearings, and presenting arguments before a judge.
Frequently asked questions that circulate in offices (and in minds)
- Is it worth just paying to be done with it?
Not always. Sometimes it is an inflated estimate based on assumptions. A hasty payment may be much more expensive than a considered approach. - Are we done paying the VAT assessment amount?
Not necessarily, as the assessment relates to the percentage of the business’s profit, a debt is automatically created to the Income Tax and the National Insurance Institute.
- Is it possible to reach a compromise without going to court?
Yes. The Tax Authority is open to negotiation, especially if the request is well-structured and has a serious line of argument. - Is there a criminal risk?
In cases of material discrepancies or suspected fraud, absolutely yes. This is where the lawyer’s role comes in again – not only to reduce the charge, but also to prevent escalation. - What if the assessment includes periods that have already been assessed in the past?
It may be possible to claim silencing or exceeding authority – depending on the circumstances.
Interim summary: A mole is a starting point, not the end of the road
The biggest mistake is to think that an assessment is a sentence. In reality, it is a proposal – strict, one-sided, and very unfriendly – that can, and sometimes must, be dealt with.
Those who do it right, with smart legal support and a professional response, can not only dramatically reduce the bill – but also convey to the Tax Authority: You don’t give up without understanding exactly what and why.
