Facts of the case

The taxpayer claimed a VAT deduction for the purchase and use of a vehicle for business purposes. In the context of the procedure for the removal of doubts, the taxpayer proved their entitlement to the deduction by means of a logbook. However, the tax authority assessed this as unreliable because the logbook submitted by the taxpayer started on 7 July 2015 and the physical handover of the vehicle did not take place until 17 July 2015. Therefore, the tax authority asked the police to provide information on the movement of the vehicle during July. The police provided this information to the tax authority and based on this information the tax authority then assessed that the claim for deduction was unjustified because the data in the logbook did not correspond to the data obtained from the police. The same conclusion was reached by the Appellate Tax Directorate.

The taxpayer resolved the dispute through the courts. In its first judgment, the SAC concluded that the tax authority was entitled to request CCTV footage from the police, as they were data necessary for the tax authority. At the next stage, the taxpayer appealed to the Constitutional Court, which granted the appeal and obliged the SAC to deal with the question whether the Police Act allows the police to provide CCTV footage to other public authorities.

Reassessment of the case by the SAC

The SAC stated that the Police Act obliges the police to provide public authorities with information obtained in the performance of their tasks, if this is necessary for the performance of tasks within their competence. In turn, the Tax Code imposes an obligation on public authorities (including the police) to provide the tax authorities, upon request, with data necessary for the administration of the taxes they process. Thus, in the present case, according to the SAC, it is crucial to assess whether the provision of CCTV footage is necessary for the administration of taxes.

In assessing the necessity, the SAC relied on the distribution of the burden of proof in tax proceedings. It is primarily the tax entity that is obliged to claim and prove all relevant facts for determining the tax base and the amount of tax. If the tax authorities have doubts as to the accuracy of the tax documents submitted, the taxpayer must prove their entitlement to the tax deduction in another way. In the proceedings before the tax authorities, the taxpayer submitted a logbook to prove the use of the vehicle for business purposes, which can be disputed even without confronting it with the CCTV footage. According to the SAC, if the logbook can be disputed in another, less invasive way which does not require the transmission of information, including personal data, the use of CCTV footage is not necessary.

The SAC concluded that in the present case it was not necessary to obtain records of the vehicle’s movements, because the tax authority could have questioned the logbook in other ways, and it would have been up to the taxpayer to dispel such doubts. It has recalled that during the tax proceedings, the tax authority had some doubts about the legitimacy of the tax deduction claim in relation to the logbook submitted by the taxpayer, since the logbook had already started already on 7 July 2015, but other documents showed that the taxpayer had made use of the vehicle only 10 days later. Therefore, in order to dispute the entire deduction claim (beyond the 10 days already questioned), the tax authority must also raise other doubts, which cannot be based on the CCTV footage.