Parallel Audit of the Austrian Court of Audit and the Swiss Federal Audit Office - Controll of VAT

Report ID: 3

In a parallel audit the Austrian Court of Audit and the Swiss Federal Audit Office carried out a comparison of VAT inspections in the context of inspections on the premises in both countries. The year 2002 served as the basis for comparison, unless otherwise indicated.

Key Figures

In Switzerland there are approximately 300,000 registered entities liable to pay VAT; in Austria there are more than one million taxable entities. The comparatively high figure in Austria is due to approximately one million small enterprises subject to tax, the figure for these in Switzerland is only 186,600.

In Switzerland 160 inspectors were assigned to the VAT inspections, and they carried out approximately 6,700 audits. In Austria approximately 1,746 inspectors carried out around 42,500 audits, which – with the exception of special audits (Umsatzsteuer–Sonderprüfung) – concerned all attributable federal taxes.

In Switzerland, due to the activities of the inspectors, subsequent claims amounting to approximately EUR 164 million were made.

In Austria external audits led to EUR 1,293 million worth of subsequent tax claims, of which EUR 497 million concerned VAT.

In Switzerland an inspection resulted in a subsequent average VAT claim of approximately EUR 24,600 EUR, while in Austria the total subsequent average claim was approximately EUR 30,400, approximately EUR 11,700 of which was VAT.

In Switzerland, an inspector achieved on average subsequent claims of approximately EUR 1 million per annum, whereas in Austria the activities of an external auditor resulted on average in subsequent tax claims of approximately EUR 0.7 million, of which EUR 0.3 million concerned VAT.

The VAT system is similarly structured in both countries. However, existing differences should be taken into account in interpreting the comparison.

Legislation

The normal tax rate in Austria is 20 %, in Switzerland this is 7.6 %. The annual revenue level at which liability to value–added tax is incurred is considerably higher in Switzerland than in Austria.

This level is EUR 48,585 (CHF 75,000). In Austria tax liability is already incurred by annual revenues of more than EUR 22,000, which ex plains why so many small enterprises in Austria are registered to pay tax.

Organisational structure

In contrast to Switzerland, VAT in Austria is levied and inspected together with income tax and profits tax. 41 regional tax offices have been set up to this end. Monitoring the biggest enterprises is carried out by special organisational units.

The VAT inspections in Switzerland are carried out by the Federal Tax Administration (FTA) in Bern. The inspectors are based all over Switzerland.

Monitoring procedure

In Austria the procedure of a VAT–inspection is regulated in a published service regulation and is transparent for all involved. A concluding discussion on the premises about the results of the external audit is compulsory. The supplementary tax claims are stipulated by decree. Up–to–date controls are carried out using a special method, a special VAT audit (Umsatzsteuer–Sonderprüfung).

In Switzerland general information is published about the procedure concerning VAT inspections. The procedure has been standardized into three types of inspections.

Case selection and allocation

In Austria, tax offices draw up annual audit plans on the basis of three criteria (time, group and individual selection). The cases to be inspected over the coming weeks are assigned by the management.

In Switzerland, an inspector from the Federal Tax Administration receives a list of about 200 enterprises, (criteria–based selection and random selection) for several years, from which inspection cases are selected by the inspector himself. In addition, inspections which are particularly urgent are assigned by the management.

Controlling data

In Austria the relevant controlling data are published annually in a so–called “Anti–Fraud Report“.

In Switzerland there is a minimum of controlling data for internal use.

Value Added Tax Administration

Report ID: 25

This material provides information on the course and results of parallel audit performed by the Supreme Audit Office, Czech Republic and the Supreme Audit Office of the Slovak Republic which was concerned with the area of administration of value added tax and use of the VIES (Value Added Tax Information Exchange System).

In May 2004, the Czech Republic and the Slovak Republic acceded to the European Union and, consequently, income from the value added tax affects not only the State budgets of the two countries, but also the budget of the European Union as a whole. The parallel audit was concerned particularly with the procedure of tax administrators in relation to a review of the value added tax paid within commercial transactions between the individual member countries of the European Union.

Introduction of the VIES system enabled electronic exchange of information on registration of VAT payers in the individual member countries of the European Union and on commercial transactions performed by the VAT payers. Variance between information in the VIES and information stated in a value added tax return submitted by a taxpayer should alert the tax administrator to any suspicious cases and facilitate detection of tax evasions or frauds.

Excise Duty Administration

Report ID: 27

The joint report presents information about the course and result of international cooperation in parallel audits performed by the Supreme Audit Office, the Czech Republic, and the Supreme Audit Office of the Slovak Republic, focused on excise duty administration after the accession of both countries into the European Union.

The cooperation was performed pursuant to the Agreement on Audit Cooperation signed in February 2006.

Parallel audits were chosen with respect to radical changes in the excise duty collection system as a result of the accession of the Czech and Slovak Republic into the EU internal market as of 1 May 2004. The functioning of the EU internal market requires free movement of goods, including excisable goods. The basic principle is to enable circulation of tax-free goods up to the date of their presentation for end use. The new legislation adopted in both countries enables movement of goods under tax supervision under the duty suspension arrangement in accordance with the aforementioned principle. The system imposes high requirements on tax authorities and anticipates mutual cooperation of particular administrative authorities of the Member States in the fight against tax fraud.

The cooperation between the SAO, CR and the SAO SR enabled comparison of legislation governing the field of excise duties in both countries, procedures of the Czech and Slovak Customs Authorities at the start and end of the movement of goods under the duty-suspension arrangement between both countries, registration of movements and also comparison of information exchanged between Customs Authorities under international cooperation.