A landmark decision by the Council of State has provided relief to thousands of taxpayers who had been subjected to repeated tax assessments (taxes, duties, levies, etc.) issued by the tax authorities. These assessments had been repeatedly annulled by administrative courts due to procedural flaws by tax offices, yet new ones kept being reissued. The ruling puts an end to this form of “hostage-taking” of taxpayers.

According to the Council of State, a tax assessment for the same violation may only be reissued once and cannot be extended indefinitely.

Furthermore, the court stressed the need for legislative action to establish a statute of limitations, beyond which no financial or other penalties may be imposed on the taxpayer.

A businessman was definitively vindicated by the ruling, which blocks indefinite reissuance of tax penalties for the same offense.

31 Years of Legal Battles

For 31 years, a businessman in the electronics sector had been fighting to annul a fine imposed due to the issuance of three fictitious invoices. Over this period, he repeatedly won in court, which annulled the fines. Yet the tax authority continued issuing new tax assessments, effectively restarting the statute of limitations each time.

From the Drachma Era

The businessman was first audited in November 1994, when Greece’s currency was still the drachma. The audit revealed three fictitious invoices totaling 23,777,000 drachmas (€69,778).

Three years later, in March 1997, a fine of 47,554,000 drachmas (€139,556) was imposed under the Code of Books and Records (KBS). This was annulled in 2003 by the Athens Administrative Court of Appeal.

In July 2005, the local tax office chief imposed a new fine of €118,268 for the same violation. This was again annulled by the courts in 2012 and again in 2013, with the pattern repeating—tax authorities reissuing the same penalty repeatedly.

However, in 2022, the administrative courts ruled that after previous annulments, a third assessment issued in 2013 was no longer valid, having surpassed both the original five-year statute of limitations and the one-year extension allowed under specific circumstances.

Tax Authority Pushes Back

Despite this, the tax authority appealed to the Council of State, arguing that the statute of limitations extension in Article 84 of the Income Tax Code (ITC) could apply repeatedly in cases of procedural annulments.

Specifically, they claimed the one-year extension should be applied every time a tax assessment is annulled, regardless of how many times the process has already been repeated.

Final Blow from the Council of State

The Council of State’s Section B, presided over by Vice-President Konstantinos Kousoulis and reporting judge Angeliki Chaïda, unanimously rejected the tax authority’s appeal, definitively vindicating the businessman.

Statute of Limitations Principle

The court reiterated the principle established by the Council of State’s Plenary:

“The statute of limitations period must be relatively short. The five-year limitation for income tax meets constitutional standards. Any extension provisions must be proportionate—based on the cause of the extension and the period it applies—and must be narrowly interpreted as exceptions to the general rule.”

Accordingly, the court concluded:

“The extension under paragraph 6 of Article 84 of the ITC—narrowly interpreted as an exception to the general five-year rule—can be applied only once and cannot be prolonged indefinitely until the tax authority manages to issue a procedurally valid assessment.”

“Any contrary interpretation that allows unlimited extensions upon each annulment due to procedural error lacks adequate legal foundation and fails to meet the legal certainty and predictability requirements set by the principle of legal security.”

This decision not only closes a decades-long case but also sets a precedent that offers clarity and protection to taxpayers across Greece.