News (#9 September 2020)

Cases

Courts cancelled tax fine of Naftogaz for 2.4 billion

The Sixth Administrative Court of Appeal did not satisfy the appeal of the office of large taxpayers of the State Tax Service and left unchanged the decision adopted by the court of the first instance to cancel the application of a fine of UAH 2.376 billion (including VAT) to NJSC Naftogaz.

The Sixth Administrative Court of Appeal and the court of first instance, the District Administrative Court in Kyiv, concluded that Naftogaz was unlawfully and unreasonably denied registration of adjustment calculations from 12 March 2018, for a total amount of UAH 4.75 billion.

At the same time, Naftogaz paid tax obligations under the corresponding invoice, which was not denied by the controlling authority.

In June 2020, the District Administrative Court in Kyiv rejected the claim of Naftogaz, in which the company asked to cancel the order of the Ministry of Economy to charge it UAH 163.5 million in penalties for late payment of dividends for 2018.

The reason for charging penalties was that part of the dividends for 2018, UAH 8.17 billion out of UAH 12.25 billion, Naftogaz transferred to the state budget after 1 July, which was in violation of the law on the management of state property objects and the government order.

The penalty was calculated for 21 days at the discount rate set by the NBU, since the last payment of UAH 8.17 billion was transferred on 22 July.

The decision to pay UAH 12.25 billion in dividends for 2018 is regulated by the government decree of 24 April. This act sets the deadline for paying dividends as 30 June 2019. At the same time, Naftogaz questioned the date of adoption of this decree. In October 2019, the Ministry of Economy proposed that the Cabinet of Ministers urgently provide the Ministry of Economy with documents for charging Naftogaz penalties for late dividends paid to the state budget.

For the period from 2 July to 22 July 2019, NJSC Naftogaz of Ukraine accrued a penalty in the amount of UAH 163.5 million for late payment of dividends to the state budget.

EU Court of Justice overturned European Commissions EUR 13 billion of Apple fining

The EU Court of Justice overturned the decision of the European Commission regarding the fine levied on Apple of EUR 13 billion imposed by the European Commission in 2016 because of its activities in Ireland. The Court decided that the European Commission mistakenly announced that Apple Sales International (ASI) and Apple Operations Europe (AOE) received a special economic advantage and state aid in Ireland.

In 2016, the European Commission demanded that Apple reimburse the Irish government for illegal tax subsidies, as such assistance violates internal market rules. This is a case of two Irish tax decisions of 29 January 1991, and 23 May 2007, in favour of Apple Sales International and Apple Operations Europe, which were not tax residents of Ireland. These rules were in effect until 2014 when Apples new business structure began operating in Ireland. The Commission found that the benefits received from Ireland, where Apple has its headquarters, led to a significant reduction in tax payments from the company.

According to calculations by the European Commission, in so doing Ireland gave Apple a tax advantage of EUR 13 billion.

Apple has since appealed against the fine to the EU Court of Justice, claiming that such a sum does not correspond to reality and common sense. Ireland, whose economy has benefited from the investment of multinational companies attracted by low tax rates, also appealed the Commissions decision.

The European Commission rejected the arguments, claiming it did not seek to manage international tax laws and accused Ireland of not doing its job during Apples tax assessment.

State-owned Oschadbank won suit against Russias Sberbank over SBERBANK trademark

Oschadbank has won a lawsuit against Sberbank of the Russian Federation, which claimed that Sberbanks registration of the SBERBANK trademark on the territory of Ukraine violated the rights of Sberbank of Russia. Oschadbank won the case, which lasted more than four years. During the trial, three examinations were conducted, and more than 100 petitions from the parties were considered.

The Court of Appeal agreed with the position of Oschadbanks representatives and refused to satisfy the claim of Sberbank of Russia.

In the main dispute, Oschadbank insisted on the illegality of renaming the Ukrainian daughter of Sberbank of Russia to Sberbank and claimed violation of intellectual property rights in January 2016.

Oschadbank believes that Sberbank of Russia uses the SBERBANK trademark illegally, which can mislead customers and influence their behaviour in a certain way.

In response to the main claim of Oschadbank, Sberbank of Russia filed a counter-claim, which was resolved in favour of Oschadbank on 10 August 2020.

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