- Tax Controversies
1.1 Tax Controversies in this Jurisdiction
In Ukraine, most tax controversies arise following a tax audit of a taxpayer company. Corporate income tax (CIT) controversies in particular may arise because of allegedly illegal deductions for CIT purposes. Such allegations relate to violations discovered by the tax authorities during tax audits of the taxpayer's business partners.
Taxpayers often initiate tax disputes concerning value added tax (VAT) liabilities. VAT controversies arise from either a tax audit of the taxpayer's VAT return or from the tax authorities' denial or inaction concerning a claimed VAT refund.
Property tax disputes usually have their origin in the tax base assessment conducted by a tax authority.
All taxes may give rise to tax controversies, but CIT and VAT disputes generate most of the administrative courts' caseload. While carrying out audits, tax authorities usually focus on whether a taxpayer has made a proper assessment of tax amounts for accounting and reporting purposes. Taxpayers often dispute additional assessments by challenging both the amount of the tax and administrative decisions forming the grounds for the tax audit. Taxpayers also often challenge the tax authority’s denial of a VAT refund or of registration of tax invoices required to receive a VAT refund.
Tax controversies are also initiated by taxpayers because of the continuing inaction of a tax authority regarding a taxpayer`s requests or applications. Individuals often challenge property tax assessments by a tax authority or social contributions liabilities.
Tax disputes on tax debt recovery initiated by tax authorities constitute a significant amount of the tax disputes in Ukraine.
A taxpayer may mitigate the possibility of tax controversy prior to a tax audit through the following means:
- proper maintenance of the documentation which is required for an audit;
- regular verification of business processes and accounting records;
- assessment of the credibility of business partners to avoid potential tax risks;
- obtainment of binding rulings from a tax authority –a binding ruling on the application of the legislation in certain circumstances may be either applied by the taxpayer or challenged in court;
- comprehensive and timely submission of responses to the tax authority’s requests; and
- preparation for a tax audit, once it is anticipated – big companies engage external advisors to help prepare employees for planned audits concerning complicated tax issues.
Once a tax authority has initiated a scheduled or unscheduled tax audit, the possibility of a tax controversy is mitigated by working co-operatively with the auditors. A taxpayer should provide the inspectors with the records requested. Nevertheless, a taxpayer should check whether the grounds for the audit as well as the auditors' authorisation are valid.
Currently, Ukraine is in the process of implementing mechanisms to combat tax avoidance. In December 2019, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS Action 15) entered into force in Ukraine. From January 2020, its provisions concerning tax liabilities of non-residents are applicable for bilateral tax treaties concluded by Ukraine. Other provisions shall apply from June 2020.
In January 2020, the Parliament adopted large-scale amendments to the Tax Code of Ukraine aimed at implementing the BEPS Action Plan in Ukraine (Actions 3, 4, 6, 7, 8-10 and 13). However, the President has not yet signed it into law.
The number of tax controversies with regard to these rules is likely to increase in the near future.
After additional tax assessments, the tax must be paid within ten days unless a taxpayer initiates an administrative complaint procedure or challenges the tax notice of assessment in court. Administrative complaint postpones the payment date until a taxpayer receives the State Tax Service’s decision on its complaint. Commencement of litigation in the court of first instance or in the appellate court postpones the payment deadline until the court’s judgment enters into force. However, there is no possibility of such postponement if a taxpayer files a cassation appeal unless the Supreme Court suspends the enforcement of the appeal court's ruling.
If the taxpayer fails to pay the amount of tax due on time, the tax authority may place a tax lien or administrative arrest on the taxpayer's assets, file a judicial claim on tax debt recovery, and enforce collection of the additional tax by seizing bank accounts and taxpayer`s property.
COVID-19 has influenced both current and new tax controversies procedurally, but neither the substance of the disputes nor their final outcome are affected.
The deadlines for lodging administrative complaints to the tax authorities (except for those connected to VAT refunds) have been suspended.
The process of review of the cases themselves, though, has not been significantly modified, the parties can still attend court hearings if necessary. At the same time, to avoid the possible risks, COVID-19 related legislation has simplified participation in court hearings via video call. Different services are used for this purpose, for instance, EasyCon (in the Supreme Court), Zoom, Skype, etc. If the parties do not attend court hearings due to circumstances connected to the quarantine and do not lodge a motion for online hearing, the court hearings can be postponed. Documents are normally submitted to the court through ordinary post, although sometimes they are brought to the court’s registry (25% of cases) or sent through the “E-Court” service (though very rarely, up to 4%of cases).
Although the courts are properly functioning despite the quarantine, we still expect some delays in obtaining judgments in pending cases.
With regard to tax audits, some of them are prohibited by the COVID-19 related legislative framework. The prohibition covers factual, scheduled and the majority of unscheduled tax audits, except for tax audits related to VAT refunds, factual tax audits in the area of excise tax payments, and tax audits on the motion of a taxpayer. Audits started before the quarantine have been put on hold till the May 31st.
In view of the suspension of most deadlines we expect a lot of tax audits in the second half of the year and numerous additional tax assessments. This prognosis is also supported by the fact that the state budget will face a significant deficit due to the crisis and that the tax authorities will therefore seek to increase the revenue. Moreover, the policy and the conduct of the tax authorities are far from being predictable, especially in light of the recent dismissal of the Head of the State Fiscal Service and the absence of a clear crisis response action plan from the government.
All these facts being considered, we expect a significant increase in tax controversies in the near future, predominantly because of unreasoned tax assessments. BEPS-related tax controversies will become frequent from the beginning of 2021, when the relevant legislation will come into force.
- Tax Audits
The State Tax Office selects a company for scheduled audits owing to the presence of certain tax risks. A company is considered a “high-risk” taxpayer based on the following conditions:
- the increase in the rate of a company's CIT or VAT liabilities is 50% lower than the company's annual outcome or average tax amounts in the business sector;
- a company has made payments to, or engaged in, commercial relationships with risky business partners (eg, insolvent entities) or offshore companies; and/or
- a tax authority has received notification about alleged tax avoidance from a criminal investigation office.
“High-risk” taxpayers may be included in an audit schedule annually. “Middle risk” and “low risk” companies are businesses that participate in risky commercial relationships or declare income decreases in tax returns; they may be audited once every two and three years respectively.
A tax authority may conduct an unscheduled tax audit if:
- there is information on potential tax avoidance on the part of the taxpayer and the latter did not provide explanations and documents upon official request;
- a tax return has not been filed due;
- a taxpayer has filed a correcting return to the audited documentation; or
- a taxpayer has filed a tax return for a VAT refund.
Tax authorities regularly audit large corporations or certain business sectors. Lately, tax authorities have audited fuel sector businesses on excise duty payments.
A tax authority may conduct a tax audit and assess additional tax within the statute of limitations. In most circumstances, the statute of limitations expires after three years following the date of filing of a tax return (seven years in the case of transfer pricing audits). The statute of limitations shall not apply if: (i) a taxpayer has not filed a tax return for a tax period subject to an audit; or (ii) a company's official has been found guilty of a criminal offence relating to tax avoidance.
The duration of tax audits ranges from a few days to 18 months and depends on the type of audit:
- a desktop audit of tax returns shall be conducted in 30 days once the filing date has expired or a tax/correcting return has been filed;
- the duration of a factual audit (at the location of the taxpayer's business) should not exceed ten days but can be extended for a maximum of five more days;
- the duration of a scheduled documentary audit (both with or without a visit to the taxpayer’s location) ranges from ten business days for small enterprises (can be extended for a maximum of five more days) to 30 business days for large companies (can be extended for a maximum of 15 more days);
- the duration of an unscheduled documentary audit (with or without visiting the taxpayer’s location) ranges from three business days for certain individual entrepreneurs to 15 business days for large companies (can be extended for a maximum of ten more days); and
- transfer pricing audits must be conducted within 18 months.
The location of a tax audit depends on the type of audit. Factual or scheduled or unscheduled visiting documentary audits occur on the taxpayer’s premises. Scheduled or unscheduled documentary office audits as well as desktop audits are conducted in the tax authority’s headquarters.
Both desktop and electronic audits are based on data available on the electronic databases of the tax authority. When conducting documentary and factual audits, a tax authority may request documentation confirming a real taxpayer’s commercial relationships with its business partners. A taxpayer is entitled to submit either printed or electronic documents. In practice, taxpayers usually submit printed documents even though they are maintained electronically in accordance with the law.
Key areas drawing tax auditor's special attention include:
- the existence of commercial relations between a taxpayer and sham businesses;
- the participation of a taxpayer in business relations with companies subject to criminal investigation for alleged tax fraud/avoidance; and
- substantial formal mistakes and anomalies in tax returns, as well as a lack of accounting documents; and
- documentation on transfer pricing, relationships with non-residents or offshore companies.
Ukraine has not yet implemented mechanisms for the automatic exchange of tax information. Therefore, the tax authority receives tax information from foreign tax agencies only on request.
In 2019, the Parliament ratified the Agreement between the Government of the United States of America and the Government of Ukraine to Improve International Tax Compliance and to Implement FATCA and adopted the amendments to the Tax Code of Ukraine connected to the ratification of this Agreement. The Parliament has also adopted the laws in connection with the implementation of the Common Reporting Standard (CRS) in Ukraine.
Once Ukraine adopts measures on cross-border automatic exchange of tax information, the number of international tax controversies is likely to increase.
During a tax audit, a taxpayer should focus on the following key points:
- whether the reasons to conduct a tax audit are lawful and well-grounded and whether a taxpayer has been notified of the tax audit in advance;
- whether tax auditors have filed requests for explanations and documents concerning the subject of a tax audit;
- whether tax authorities' information requests meet the formal requirements; and
- whether a tax audit is carried out in full compliance with the procedural requirements.
- Administrative Litigation
Additional tax assessment, as well as any other decision of the tax authorities, can be challenged before the supreme tax authority (State Tax Service) or in court. The administrative complaint phase is an optional pre-trial procedure.
The deadline for lodging an administrative complaint is:
- ten business days after the receipt of the decision if the tax assessment is carried out because of any violations on the part of the taxpayer; or
- 30 calendar days after the receipt of the decision if the tax authority is obliged by law to carry out the tax assessment.
These deadlines can be extended if the individual at the taxpayer responsible for lodging a complaint was somehow restricted from making that complaint because of a range of circumstances or if that person was outside the territory of Ukraine at the time. This applies only if there is no other person in charge of calculating and paying taxes who could lodge the complaint on time.
Administrative complaints must be filed in writing and can be supported by any documents, calculations or evidence which the taxpayer considers it necessary to provide.
Normally there is a meeting between the taxpayer’s representative and the tax authority in charge of reviewing the claim, during which the case is discussed, and relevant documents are presented.
The burden of proof in the administrative tax procedure lies upon the tax authority which adopted the contested decision.
As a result of the administrative complaint review, the contested decision can be annulled as a whole or in part or can be left without change.
The deadline to decide on the administrative complaint is 20 calendar days. This deadline can be extended by the authority in charge of reviewing the claim, but the procedure cannot last more than 60 calendar days in total. The extension must be communicated to the taxpayer in writing within the initial review deadline.
If the taxpayer does not receive the decision on the administrative complaint or the deadline extension notice within the time period prescribed, it is assumed that the complaint is accepted as a whole.
The decision of the State Tax Service on the administrative complaint is final in the pre-trial stage, its assessment can only be challenged in court.
- Judicial Litigation: First Instance
The taxpayers can contest the decision of the tax authorities either in court directly or after the administrative complaint stage. The case should be brought in front of the circuit administrative court by the taxpayer or its representative within the six-month time limit (for a direct claim) or within one month (after the receipt of the decision on the administrative complaint).
Proceedings Before the Court of First Instance
The ordinary procedure has a preparatory stage, where all the evidence is gathered, and a stage of substantial review, where the evidence is examined and evaluated. The simplified procedure has only one stage and is either wholly conducted in writing or with one court hearing only. First instance proceedings usually take more than a year, even in the case of the simplified procedure, which requires the judgment to be given within 60 days. The judgment enters into force if no appeal is lodged.
Proceedings Before the Appellate Court
This stage takes two to three months. The judgment of the appellate court enters into force on the day of its adoption, regardless of a subsequent cassation appeal to the Supreme Court.
Proceedings Before the Supreme Court
This stage usually takes up to three months. The judgment of the Supreme Court is final and can be reviewed only exceptionally or, under strict conditions, due to newly discovered circumstances.
All the evidence must be presented during the proceedings in the court of first instance. New evidence can be brought before the appellate court only if there are valid reasons for it not being presented before. The Supreme Court cannot examine any new evidence at all.
The court can, on its own initiative or on the motion of a party to the proceedings, order a person or entity to provide any evidence they possess.
Usually evidence is provided in documentary form, witnesses statements are rarely supplied.
The burden of proof lies on the tax authorities. No new reasoning, which did not form basis for the adoption of the contested decision, can be presented at the stage of tax litigation.
However, in some cases the burden of proof is effectively shifted to the taxpayer, for instance in determination of the beneficial ownership of the recipient of income.
In criminal proceedings, the presumption of innocence applies, and the investigating authorities must prove the existence of the offence related to tax.
Usually the evidence must be provided to the court of first instance at the time the claim is lodged. New evidence and arguments can, in principle, be presented, if necessary, during the preparatory stage of the court of first instance proceedings before the case is reviewed on substance.
The possibility of settlement is prescribed by law, but it is not common in tax disputes.
Litigation suspends the obligation to pay the contested amount. It is therefore is better not to pay until the end of the proceedings to avoid further reimbursement delays.
The courts are obliged by law to apply ECHR jurisprudence as a source of law and to follow the conclusions of the Supreme Court in similar cases.
Doctrine is not taken into consideration at all. As for guidelines, their application is more common, but is not obligatory.
- Judicial Litigation: Appeals
5.1 System for Appealing Judicial Tax Litigation
The first instance is a circuit administrative court (situated in each district and in Kyiv), which examines all the relevant evidence and provides its judgment.
The appeal can be lodged by the parties to the proceedings or by the persons or entities whose rights are affected by the court judgment. Administrative appellate courts review the appeals against first instance courts’ judgments in tax litigation. There are eight administrative appellate courts in Ukraine. Until the end of the appeal proceedings, the judgment of the court of first instance does not enter into force.
Cassation appeals are brought to the Cassation Administrative Court, which is a part of the Supreme Court. The Supreme Court does not examine the factual circumstances of the case and evidence, it only determines whether the subordinate courts correctly applied procedural and material norms to the case. The Supreme Court can decide on the case directly, or, if the circumstances were not properly examined by the subordinate court, it can refer the case to the court of first instance for reconsideration. In this latter circumstance, a new judge is appointed to the court of first instance.
The possibility of appeal does not depend on the value of the case or on the nature of the controversy. The right to a cassation appeal is limited in simple cases, or in cases where the simplified procedure was applied by the lower courts.
See 4.2 Procedure of Judicial Tax Litigation and 5.1 System for Appealing Judicial Tax Litigation.
In the first instance, the case is decided by one judge. In the appellate and cassation proceedings the case is decided by a panel of three judges, one of which is a reporting judge.
The judges are appointed randomly by the automatic case distribution system. At the same time, the panels in courts of second and third instance are stable, thus when the reporting judge is appointed by the automatic system, his or her panel takes part in proceedings by default.
- Alternative Dispute Resolution (ADR) Mechanisms
Currently there are no ADR mechanisms in Ukraine available for tax disputes. The use of mediation in tax disputes is not prescribed in legislation, since the general law on mediation has not yet been adopted. This is why the tax authorities are reluctant to participate in mediation, although it is not prohibited.
See 6.1 Mechanisms for Tax-Related ADR in this Jurisdiction.
No agreement can be reached outside the scope of the administrative complaint procedure or litigation.
The taxpayer is entitled to obtain advance individual tax advice concerning the application of a relevant piece of legislation to a specific situation. Individual tax advice can be relied on only by the taxpayer to whom it is addressed, but such advice is also published on the official website of the State Tax Service.
General tax advice is applicable to all taxpayers. Taxpayers cannot be held liable through financial penalties for actions based on general or individual tax advice. However, the obligation to pay the amount of tax prescribed by law still applies.
Tax advice can be contested in court. If the court declares tax advice void, new tax advice that pays due attention to the court’s judgment must be provided to the taxpayer.
See 6.1 Mechanisms for Tax-Related ADR in this Jurisdiction.
No ADR mechanisms are available in such cases.
- 7. Administrative and Criminal Tax Offences
A criminal investigation is usually initiated following the alleged tax offence identified by a tax authority in the tax audit report. If an additional tax assessed by a tax authority exceeds USD100,000, the authority shall notify the tax offences investigation office of a potential criminal offence. In practice, the outcome of the criminal proceedings depends on the existence of a final judgment in a tax dispute.
The tax offences investigation office may also carry out criminal proceedings independently from a court dispute (eg, perform a preliminary inquiry).
Following a tax audit, a tax authority can also initiate an administrative offence procedure against a taxpayer's official, where that official was responsible for calculating and paying taxes.
The relationship between tax litigation and criminal proceedings concerning the alleged tax avoidance of a taxpayer varies from case to case. A court may suspend administrative litigation concerning a review of a tax authority's additional assessment if the trial is objectively impossible until the final judgment in another dispute is given. In practice, courts rarely suspend the administrative process.
Criminal and administrative offence proceedings may be conducted by the court either separately from or following a tax litigation. In practice, both pre-trial investigation and the trial itself are significantly time-consuming. Therefore, criminal litigation usually depends on the results of a tax dispute.
If the actions of a taxpayer's official constitute an administrative offence under the law, a tax authority shall initiate an administrative infringement procedure. In practice, tax authorities start administrative infringements following a tax audit.
Additionally assessed liability following a tax audit in the amount of approximately USD100 000 or more can potentially mean the existence of a crime of tax avoidance. As a result, an investigation office, when notified of such facts, shall initiate criminal proceedings.
Administrative infringements and criminal offences are considered separately. At the same time, facts found by the court in one of these proceedings may constitute prejudicial information in another.
The administrative infringement process consists of the following stages:
- initiation of a tax infringement file;
- administrative investigation performed by a tax authority;
- judicial review and the court’s ruling;
- appeal against the ruling of the court of first instance to the appellate court (optional); and
- enforcement of a ruling.
- pre-trial investigation;
- preliminary procedure;
- court trial;
- appeal proceedings;
- enforcement of the judicial ruling; and
- cassation appeal in the Supreme Court (optional).
A taxpayer must pay the additional tax assessed, plus fines and penalties. Ukraine does not have a mechanism for the reduction of potential fines and penalties if payment is made up front.
A taxpayer may enter into an agreement with the prosecution in order to terminate a criminal trial. The agreement prescribes the taxpayer's explicit admission of guilt for a crime, governs conditions for partial relief of civil liability for damages caused to the state, and contains obligations for the suspect/accused regarding co-operation in disclosing other criminal offences. The court is obliged to approve the agreement.
An agreement with the public prosecutor does not impact payment of the tax assessed by a tax authority. Under the law, the tax authorities cannot enter into agreements with taxpayers.
There is only one strategy concerning appeal against criminal tax decisions. If a taxpayer or a taxpayer's official is found guilty, they may file an appeal to the appellate court of the region. The appeal court's ruling enters into force once it is announced. Nevertheless, the convicted person may file a cassation appeal to the Supreme Court.
Ukraine does not have a general anti-avoidance rule or specific anti-avoidance rules. A taxpayer may challenge transactions and operations in the administrative court. The proportion of these cases is small. There is no public information on criminal tax cases concerning transfer pricing rules in Ukraine.
- Cross-Border Tax Disputes
In cases of double taxation, a taxpayer shall file a lawsuit against a tax authority. The mutual agreement procedure is not efficient in Ukraine even though it is prescribed under double taxation treaties. In January 2020, the Ukrainian Parliament adopted the amendments to the Tax Code of Ukraine which establish mutual agreement procedures available for both taxpayers and tax authorities (this has not yet been signed by the President). Arbitration procedures concerning double taxation situations are not available.
Ukraine does not have a general anti-avoidance rule or specific anti-avoidance rules.
In December 2019, the MLI Convention covering the principal purpose test (PPT) entered into force in Ukraine. The PPT is an anti-abuse rule similar to a GAAR for transactions and arrangements. Most of the double taxation treaties between Ukraine and foreign countries also include PPT provisions. There are no judicial decisions or pending court disputes concerning the PPT so far. Additionally, in January 2020 the Parliament adopted amendments to the Tax Code of Ukraine introducing the PPT into Ukrainian tax legislation.
In Ukraine, a taxpayer may only challenge international transfer pricing adjustments in court.
Unilateral, bilateral and multilateral advance transfer pricing agreements are available in Ukraine. The parties to the agreement are large businesses and the State Tax Service. A foreign tax authority may be engaged under a double taxation treaty. The agreement may cover current or previous tax periods.
Stages of the procedure include:
- submitting a proposition for preliminary consideration of an advance transfer pricing agreement procedure, and preliminary consideration (optional stage);
- submitting proposals for a transfer pricing agreement procedure;
- consideration of the procedure with discussion between a taxpayer and a tax authority;
- making a decision;
- signing of an agreement; and
- termination of an agreement.
A taxpayer and the State Tax Service are entitled to terminate a procedure at any stage.
Transfer pricing situations give rise to most cross-border court disputes in Ukraine. However, permanent establishment issues constitute a significant part of the cross-border caseload.
The administrative complaint procedure is completely free of charge.
Court fees are paid in each instance by a person lodging a claim, appeal or cassation appeal. Payment of the court fee is a prerequisite for considering the respective submission.
The common approach of the courts is that annulment of the tax assessment is a pecuniary claim. The court fee in the first instance in such cases is in the amount of 1.5% of the claim’s value for companies and 1% for individuals. There are minimum and maximum court fee amounts, these being approximately USD70 and USD700 for companies and approximately USD30 and USD350 for individuals. For each non-pecuniary claim, a court fee in the amount of approximately USD70 is paid by companies and approximately USD30 by individuals.
In the appellate court, the court fee is 150% of the amount paid in the first instance. The maximum court fee for lodging an appeal is approximately USD1050.
In the Supreme Court, the court fee is 200% of the amount of the court fee in the first instance, the maximum being approximately USD1400.
If the claim brought by a taxpayer is satisfied by a final judgment, the court fee is reimbursed by the tax authorities from the state budget. If the claim is denied, the court fee paid by a taxpayer is not refunded. No interest is applicable.
The court fees paid by the tax authorities must not be reimbursed by a taxpayer.
Indemnity mechanisms are available within the proceedings for contesting a tax assessment, but they are rarely used by taxpayers since the damage is in most cases not easy to calculate. Indemnity can also be claimed separately in commercial or civil proceedings.
See 6.1 Mechanisms for Tax-Related ADR in this Jurisdiction.
There are no precise statistics as to currently pending cases.
As for 2019, approximately 40,000 tax related cases were filed before the courts of first instance. The total number of cases attributed to a judge of first instance is approximately 400 per year, among which approximately 20% are tax related cases.
The appellate courts reviewed approximately 10,000 tax related judgments of the courts of first instance in 2019.
The Supreme Court ruled on approximately 15,000 tax related cassation appeals in 2019.
The approximate value of the cases where final judgment was issued reached USD850 million in 2019.
In 2019, value added tax was the most commonly litigated form of tax, with approximately 30% of cases (with a value of approximately USD13.5 million), followed by corporate income tax and personal income tax, which were the subject of approximately 8% of cases each (with a value of approximately USD7 million and approximately USD130,000 respectively).
In 2019, approximately 30% of final judgments in all tax related cases were given in favour of the taxpayers and approximately 70% in favour of the tax authorities. These statistics include all the cases to which tax authorities were party. There are no separate statistics relating solely to tax assessments.
The number of disputes between taxpayers and tax authorities is likely to decrease in the near future. At the same time, those tax controversies that do still arise will be more and more complicated, especially when tax authorities start auditing compliance with the newly adopted Tax Code amendments. Therefore, the role of a lawyer or a tax consultant will become crucial.
Preparation for a potential tax controversy starts well in advance. Proper maintenance of the accounting documents, regular verification and updates of business processes and accounting records are the key elements of such preparation. In addition, tax advice should be obtained in case of any uncertainty on tax legislation compliance.
If a tax issue arises, a taxpayer should first communicate with a tax authority (by requesting a binding ruling, filing an application/letter). At the same time, a taxpayer should be prepared for a potential administrative complaint procedure or court dispute. If a tax audit is initiated, a taxpayer should become familiar with the legal grounds for that tax audit, its subject, terms, etc. If a tax authority finds any violations on the part of the taxpayer, which are not well reasoned, a taxpayer should submit objections to the audit report.
If a taxpayer disagrees with a tax notice or any other administrative decision issued by a tax authority, the taxpayer should file an administrative complaint to the State Tax Service. If that complaint does not succeed, a lawsuit should be initiated. Preparation for a court dispute includes analysis of the relevant court practice to identify the possible risks and chances of success.