Liability of a Management Board Member of a Foreign Company for Tax Arrears of that Company: Considerations Regarding Article 116a(1) of the Tax Ordinance
Liability of a Management Board Member of a Foreign Company for Tax Arrears of that Company: Considerations Regarding Article 116a(1) of the Tax Ordinance

Summary/Abstract: The subject-matter presented in this article focuses on whether Article 116a(1) of the Tax Ordinance allows for 'appropriate' application of the rules, including the exonerative and liability limiting grounds arising from Article 116 of the Tax Ordinance, to transfer liability for tax arrears of other legal persons onto members of management bodies of foreign companies. Therefore, it should be considered whether the applicable provisions of the tax law allow for the attribution of such liability or whether normative changes need to be introduced in this respect. Until recently, inconsistent and variable case law of the Supreme Administrative Court had been confirmation of the existence of the above-mentioned problem in the business practice, especially in international trade, and at the interface between tax and bankruptcy law. In conclusion, the authors emphasize de lege lata that it is inadmissible to apply the rules derived from Article 116 of the Tax Ordinance (TO) to transfer of liability for the tax arrears of a foreign company onto the members of its management bodies. This is an extremely important issue for the tax as well as the insolvency practice both at a national and the European level.

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