According to the filed suspicion, the concealed tax and withholding obligations consist of approximately 200 000 euros of value added tax, more than 500 000 euros of social tax and more than 300 000 euros of income tax.
If convicted, the suspect may face one to seven years in prison. Since the activities were carried out in the interest of the company, suspicion has also been filed against the legal person, which may face a monetary penalty if convicted.
The board member of the suspected company used a subsidiary of the company to conceal the tax liability. According to the investigation, it was not a company acting independently, but a legal body in which employees were registered.
According to Jaanika Mändla, Head of Division of the Investigation Department of the ETCB, the employees registered in the subsidiary worked only on behalf of the parent company that received the suspicion. “Over the course of two years, the labour taxes of an average of 38 employees were concealed each month, as neither of the companies submitted data to the ETCB in their declarations of income and social tax, unemployment insurance premiums and contributions to mandatory funded pension,” said Jaanika Mändla.
The payments of wages to the employees were made by the suspect from the bank account of a third company, to which the necessary funds were transferred from the parent company.
Despite not submitting declarations, accounting and payroll records were kept at the subsidiary and pay slips were issued to employees, which reflected the withholding of income tax. The employees added the pay slips to their income tax returns in order to prove the payments made by the employer and the withholding of income tax, thereby requesting a refund of the income tax seemingly overpaid.
Jaanika Mändla stressed that the criminal case in question stands out due to the particularly great losses and the fact that labour taxes were concealed in full. ‘The calculation, declaration and payment of taxes on the wages paid to employees is, as a general rule, the responsibility of the employer. All employees can sign in to the e-services environment of the ETCB (e-MTA) and check whether their employment has been registered by the employer and their wages have been declared as required. Undeclared wages (so-called envelope wages) mean that no contributions are made to employees’ pension pillars and that the employees are not eligible for benefits calculated on the basis of income subject to social tax,” explained Jaanika Mändla.
The pre-trial proceedings of the criminal case are conducted by the Investigation Department of the ETCB. The proceedings are led by the District Prosecutor’s Office for Economic Crime and Corruption.
