Incorrect preliminary VAT returns

As a rule, entrepreneurs must submit a preliminary VAT return to the tax office, in which they must self-assess the VAT payable or surplus for the reporting period. In this case, VAT is not initially assessed by means of a formal notice, but calculated and paid by the entrepreneur. A tax shortfall is deemed to have occurred if tax credits are claimed unlawfully or in an excessive amount, for example by deducting incorrect input tax amounts.

Excessive input tax
The Administrative High Court (VwGH) recently addressed this issue in a ruling. The case originated with a lawyer who submitted a preliminary VAT return in which she claimed excessive input tax. The tax office pointed this out to her, whereupon she stated that she had been unable to file a correct preliminary VAT return. She claimed that the correction would be made in the annual VAT declaration. The tax authority consequently assumed a tax shortfall and initiated fiscal criminal proceedings.
The VwGH later held that the intention to correct unlawfully claimed input tax in the course of the annual VAT declaration does not preclude tax evasion. The temporary attainment of a tax advantage is sufficient to constitute tax evasion. If the tax creditor does not receive the correct amount at the time the tax is due, a tax shortfall has occurred, even if this is possibly compensated for later.

Note
The submission of incorrect preliminary VAT returns can have consequences under fiscal criminal law, even for minor errors. It is therefore worthwhile to obtain comprehensive advice beforehand.