A tax inspection surfaces several years of accumulated errors at once. The outcome depends far less on the inspection itself than on whether the file was prepared beforehand or is being assembled while the inspectors sit in your office.
Background
Companies must finalise corporate income tax and personal income tax annually, within the statutory deadline after the financial year ends. These filings become the reference point the tax authority works from afterwards.
Inspections are carried out on a planned basis or where risk indicators appear. The statute of limitations for tax matters runs for several years, meaning errors from earlier periods remain collectible together with late payment interest accruing daily and administrative penalties.
The areas most frequently challenged are non-deductible expenses for corporate income tax, related party transactions, personal income tax for foreign employees, and foreign contractor tax on payments made abroad.
Common challenges
- Documents scattered rather than organised. When the inspection team asks, days are lost locating contracts and evidence for earlier periods, and expenses are disallowed even though the transactions were genuine.
- Expenses missing the deductibility conditions. Contract, acceptance record and non-cash payment evidence are the three items most often absent, and they cannot be created retrospectively once an inspection has begun.
- Personal income tax on expatriates calculated incorrectly. Misjudged residency status, omitted non-cash benefits and income paid by the parent company abroad are a recurring source of assessments.
- Foreign contractor tax overlooked. Payments abroad for services, software and management fees are frequently made without withholding.
- No experienced representative in the room. Staff answering without a legal basis, or handing over documents beyond what was requested, can widen the scope of the inspection.
How TrustlineAX helps
- Finalisation filings that hold up. Corporate and personal income tax finalisation prepared with deductible and non-deductible items separated and supported item by item.
- A risk picture before the inspection. A review of open periods identifying what is likely to be challenged, with an estimate of the financial exposure for each item.
- Remediation while it is still permitted. Missing evidence obtained and amended declarations filed where the deadline still allows, which is the window most companies miss.
- An organised defence file. Contracts, evidence and supporting analysis arranged by issue, ready to produce on request.
- Representation with a legal basis. We attend the working sessions, argue positions with reference to the regulations, and keep document disclosure within the scope requested.
- Follow-through after the conclusion. Advice on accepting or appealing findings, and support with adjustments and any resulting obligations.
How we work
- Review of open periods. Records, filings and evidence for periods still within the limitation window.
- Risk assessment. A report of likely challenge points ranked by financial impact.
- Remediation. Evidence gathered and amended filings made where still permitted.
- Defence file preparation. Documentation organised by issue with supporting arguments.
- Inspection support. We work alongside you through to the final conclusion.
Frequently asked questions
How far in advance should we prepare?
As early as possible. Once an inspection decision has been issued, most remediation options have closed. Amended filings and additional documentation are generally only available before that point.
How many years can the tax authority review?
The limitation period is set in the Law on Tax Administration and runs for several years, with different periods for assessing tax and for imposing administrative penalties. Records must be retained for the periods prescribed by accounting law.
Can we correct errors voluntarily?
Yes. Amended declarations may be filed before the tax authority announces an inspection decision. Voluntary correction is almost always better than waiting to be found.
Can an inspection conclusion be appealed?
It can, where there is a basis to argue the conclusion is inconsistent with the regulations. This must be done within the statutory time limit and supported by documented reasoning.