High net worth individual’s dispute with the Tax Authorities

Our tax team has represented a high net worth individual in a dispute with the Tax Authorities over the deduction of costs for Personal Income Tax purposes.

The problem was that the costs were indirectly related to the sale of assets. Sophisticated economic analysis was needed to prove the correlation between expenses and income earned in order to have expenses deducted. Additional issue involved the principles of proportionality in tax administration as well as the principles of legal certainty, obligation of the tax administrator to conduct tax inspections in a reasonable time frame as well as the abuse of vested powers.