The extent to which employees in the Tax Administration can be pests is illustrated by the example of a small construction company from Hrvatsko Zagorje. The name and surname of the owner and the name of the company are known to the editorial office, but they do not wish to go public because, due to the actions of the Tax Administration employees in Krapina, they must go into bankruptcy instead of a pre-bankruptcy settlement.
Our entrepreneur signed a contract as a subcontractor in November 2011 with another construction company that was the contractor for the works. A residential-commercial building was being constructed in Zagreb, and one of the provisions of the contract states that the contractor will ‘make payment for part of the executed works through compensation’ in construction materials necessary for those works, which meant that a total of 30 percent of the value of the works would be paid in compensation.
Small and Large Damage In the Tax Administration, he was accused of not paying taxes, and in the meantime, they tried to burden him with the claim that he wanted to avoid paying taxes through compensation after his account was blocked so that the funds would not go to the blocked account, as the Tax Administration would immediately transfer them to themselves. However, the contract was signed in November 2011 when the company was not blocked, so there is no question of wanting to avoid blocking funds in that way.
At the same time, he was also accused of transferring funds from one account to another through assignment. He claims that it is evident from the assignments that the money went to employees, not to the account of his other company. The reason was that the company received an advance payment from a buyer for an apartment in cash, which he used to pay his workers. If he had not done so, the workers would have stopped working, causing delays in the execution of works, which would have resulted in penalties and even greater damage.
The Independent Sector for the Second Instance Procedure of the Ministry of Finance did not accept the appeal, thus confirming the first-instance decision, which stated that our entrepreneur is ‘responsible for abuse of rights, as a tax guarantor, for non-payment of tax obligations.’ He does not dispute the debt that arose towards the Tax Administration, but he claims that he did not intend to abuse his rights, as stated by the Ministry of Finance. Nevertheless, this is a small damage compared to another he suffers from the same Ministry because, due to the dynamics of these decisions, he had to go into bankruptcy.
Catastrophic Mistake Namely, a few days after the first-instance decision, he filed an appeal, but also a request for a pre-bankruptcy settlement. However, he made a catastrophic mistake. Instead of submitting the request directly to Fina, he sent it through the Tax Administration – Krapina Regional Office. He did not count on a lazy clerk in the Tax Administration who received the documents and did not warn our entrepreneur that he needed to go to Fina and submit the request for a pre-bankruptcy settlement directly there. However, the clerk processed the appeal, which, of course, ended in the usual rejection, so the final decision of the Ministry of Finance arrived before the request for the pre-bankruptcy settlement, and our entrepreneur’s company will have to go directly into bankruptcy.
However, not all is lost yet, as according to Article 68 of the Financial Operations and Pre-Bankruptcy Settlement Act, ‘the legal consequences of opening the pre-bankruptcy settlement procedure arise from the moment the announcement of the opening of the procedure is published on Fina’s website,’ and according to Article 70, procedures initiated ‘against the debtor before the opening of the pre-bankruptcy settlement are suspended…’ Therefore, the entrepreneur needs to pressure someone in Krapina to return his request and run at lightning speed directly to Fina.
