A municipality demanded payment of city tax from a shareholder of a company that operated a laundry, but ceased its activity.
The Court rejected the claim against the shareholder due to the lapse of the statute of limitations period but held that, had the period not lapsed, the shareholder would have been personally liable for the company's debts to the municipality. The law allows the collection of a city tax debts in respect of an asset held by a private company from a shareholder in it, upon fulfillment of six conditions: (1) the debt is for an asset that is not used for residential purposes; (2) the debt is a final city tax debt; (3) the company did not pay the debt; (4) the company discontinued its operations - even if it did not enter into liquidation proceedings; (5) The shareholder holds (himself or with a relative or a company in which he holds 25% of the shares), at least 25% of the issued share capital, voting rights, rights to profits or the right to appoint a manager; and (6) the shareholder took possession of company assets for no consideration or in partial consideration. There is a presumption that a company that has discontinued its activities transferred its assets to the shareholders and the burden of proof to show otherwise lies with the shareholder. Here, the shareholder held 34% of the company's shares and did not show that he did not receive company assets and therefore, had the statute of limitations period not passed, he would have been personally liable for the company's city tax debts.