OREANDA-NEWS. May 29, 2013. SORAINEN Estonia represented a member of an international group of companies dealing in sales of cosmetic and medical products in disputing an assessment by the tax authorities, who re-qualified service payments to consulting companies under the head “employment relationship”. According to the assessment, payroll taxes were imposed and input VAT deduction was denied.

Our position is that this approach is in stark contradiction with the constitutional freedom of entrepreneurship and the freedom of contract principle. Additionally, the law does not give clear and direct guidance on whether and how such a requalification should be performed. Moreover, denying input VAT deduction contradicts the principles of VAT as well as European Court of Justice (ECJ) practice. We won the dispute in the second level court.

The client was advised by partners Kaido Loor and Allar Joks and senior associate Priit Raudsepp.