Supreme Court: Tax Board cannot require management board members to submit unfiltered personal bank statements unless it provides a clear reason
Last week, the Supreme Court made a landmark decision emphasising the importance of taxpayer privacy and the need to protect it in tax proceedings.
Specifically, a dispute reached the Supreme Court in which the Estonian Tax and Customs Board required a member of the management board of a company currently in tax review to submit an unfiltered personal bank statement for a period of almost two years. The reason provided by the tax authority was that it sought to verify the origin of the former management board member’s funds used to give a loan to the company. However, the tax authority failed to explain the link between the origin of the former board member's funds and the company’s tax liability. It also failed to explain why the explanations, a filtered bank statement and loan agreements provided by the board member were not sufficient for the investigation of the company’s tax liability.
The Supreme Court decision said that the tax authority’s request to see the board member’s unfiltered bank statement for a period of almost two years constituted an extensive infringement of privacy.
Whether and under what conditions such a request could be lawful must be reassessed and interpreted by the circuit court in this dispute.
What conclusions can we draw from this?
>> Always read and consider the tax authority’s orders critically.
>> If any claims or orders appear disproportionate, it is worth asking the tax authority for more detailed reasons or consulting your legal adviser regarding the lawfulness of the request and further steps.