The National Tax Tribunal has ruled in favor of Bachmann/Partners Law Firm in a case regarding reimbursement of costs. The case concerned whether a bankruptcy estate, upon the issuance of the bankruptcy decree, succeeds to the company’s legal positions.
The case before the National Tax Tribunal concerned whether a bankruptcy estate was entitled to receive reimbursement of costs in a case involving isolated evidence collection, where the Tax Appeals Agency had – long before the bankruptcy occurred – issued a commitment for full reimbursement of costs. The specific question was whether the bankruptcy estate needed to formally declare whether it had “stepped into” the substantive appeal case at the Tax Appeals Agency. This was based on the outcome of the isolated evidence collection case (expert appraisal).
In the specific case, there was a temporal discrepancy between the trustee’s notification to the court about stepping into the isolated evidence collection case and the trustee’s notification to the Tax Appeals Agency about “stepping into” the substantive appeal case. The trustee informed the court on April 29, 2022, that they had stepped into the isolated evidence collection case. However, the trustee only informed the Tax Appeals Agency on December 22, 2022, that they had likewise “stepped into” the substantive appeal case.
The Danish Tax Agency’s position was that as long as the trustee had not formally notified the Tax Appeals Agency that the estate had “stepped into” the substantive appeal case, reimbursement of costs for assistance provided prior to that date could not be granted.
Bachmann/Partners Law Firm argued, however, that the bankruptcy estate, upon issuance of the bankruptcy decree, automatically succeeds to the company’s legal positions in accordance with bankruptcy procedural rules. The effect of a company’s bankruptcy on administrative appeal cases, including cases where the company had previously appealed a decision to a review authority before the bankruptcy, is not – unlike cases in the courts – specifically regulated. Accordingly, under the principle of general succession, a bankruptcy estate automatically becomes a party to the administrative appeal case upon issuance of the bankruptcy decree.
The National Tax Tribunal fully upheld Bachmann/Partners Law Firm’s position that a bankruptcy estate automatically succeeds to the company’s legal positions (e.g., an appeal case at the Tax Appeals Agency) and that an active “stepping in” by the bankruptcy estate is therefore not required. The use of the term “stepping in” is thus misleading in administrative appeal cases. It can also be expected that the Tax Appeals Agency will, in future correspondence sent to trustees regarding continuation of an appeal case, adjust the wording so that the term “stepping in” is no longer used.
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