The Tax Division
In 2022, 970 cases were brought before the Supreme Court’s Tax Division. The Division disposed of 1,135 cases, including 363 withdrawals and dismissals by the court clerk (32%) and 161 declarations of inadmissibility (14%). As a result, the cases on hand dropped to just under 800, which is equivalent to about three-quarters of a year of production for the Tax Division. The average case processing time decreased to 274 days. In tax cases, an advisory opinion by the Office of the Procurator General is optional. In 2022, advisory opinions by one of the four advocates general of the tax law sector were provided in 113 cases. In addition, members of the tax division of the Office of the Procurator General submitted advisory opinions at the request of the chairman of the Administrative Jurisdiction Division of the Council of State and the president of the Central Appeals Tribunal on questions of law presented to those bodies.
2021 Actual | 2022 Schedule | 2022 Actual | |
---|---|---|---|
Incoming cases | 1.220 | 900 | 970 |
Cases decided upon of, total | 1.089 | 900 | 1.135 |
Cases decided upon of, judgments | 835 | 825 | 772 |
Cases decided upon of, other | 254 | 75 | 363 |
Advisory opinions | 103 | 140 | 113 |
Final case load | 948 | 650 | 783 |
Total average turnaround time | 291 | -- | 274 |
The tax law sector also saw increasing legal complexity and a growing influence of European and international law in 2022. Disputes on income tax (20.5% of the total case load) and on local government taxes (including, in particular, matters relating to property tax (OZB/WOZ)) (38%) constituted the largest workflows in terms of number. Those two workflows also saw the most withdrawals, dismissals by the court clerk and declarations of inadmissibility. Corporate income tax cases made up 7% of the total case load, and value added tax and customs cases together made up 14%. The number of incoming cases regarding private motor vehicle and motorcycle tax (11.3%) and (within the workflow of local government taxes) property tax (OZB/WOZ) (11.7%) remained high in 2022.
In 2022, there were three cases in which the Tax Division rendered decisions on questions of law that courts that decide on the facts (District Courts and Courts of Appeal) referred to it for a preliminary ruling. These questions concerned (i) the calculation of interest to be reimbursed on refunds of tax levied in violation with EU law (ECLI:NL:HR:2022:89), (ii) the concurrence of value added tax and real estate transfer tax when converting a property to such an extent that the question arises as to whether the conversion constitutes “essentially new construction” (ECLI:NL:HR:2022:1577) and (iii) the levying of corporate income tax on the surrender of interest rate swaps associated with floating rate loans (ECLI:NL:HR:2022:312).
In addition to a claim for cassation in the interest of the law concerning incorrectly sworn in justices at the ‘s Hertogenbosch Court of Appeal (ECLI:NL:HR:2022:1438), a claim for cassation in the interest of the law was filed in one tax case in 2022 (ECLI:NL:HR:2022:1787). The issue at hand was whether there was a legal basis for the obligation imposed on business owners to purchase eHerkenning (eRecognition) software from a commercial party for EUR 20-EUR 25 a year in order to file their payroll tax returns, which they are obliged to do digitally. The District Court found no such legal basis. However, the Tax Division concurred with the Advocate General and ruled that this obligation can be imposed on business owners based on the State Taxes Act and that the limited cost of purchasing the software does not violate the principle of proportionality. The Tax Division held that there is no legal rule that dictates that compliance with statutory administrative obligations must be possible free of charge.
In 2022, the Tax Division rendered several landmark decisions on the degree of legal protection for taxpayers and withholding agents. In ECLI:NL:HR:2022:767, the Tax Division, on the one hand, relied on a broad interpretation of the statutory duty to answer the questions in a tax return, but, on the other hand, adhered to a narrow interpretation of the sanction of shifting the burden of proof in the event of a failure to provide answers or a failure to provide correct answers, by limiting that sanction to the points in dispute for which the answer may be relevant. For example, the failure to answer the question on involvement in a trust therefore cannot lead to a shift of the burden of proof in a dispute concerning the turnover of a sole trader without employees.
Both legal protection and uniformity of law were at issue in ECLI:NL:HR:2022:526. The Tax Division achieved uniformity in administrative law by requiring, as do the other highest administrative courts (the Administrative Jurisdiction Division of the Council of State, the Central Appeals Tribunal and the Trade and Industry Appeals Tribunal), that the facts and circumstances required for proving a finable offence be “established beyond a reasonable doubt”. It equated that standard with the phrase “to give evidence of”. That means that the administrative body that has imposed an administrative fine (the inspector of state taxes, the local tax officer of a municipality, etc.) must convincingly demonstrate the facts and circumstances on which it bases that fine. “To make a plausible case” is not sufficient.
Legal protection and uniformity of law were also at issue in case ECLI:NL:HR:2022:1673 that has occupied legal practice for quite some time, namely the calculation of tax interest for periods when no tax liability exists because the amount in tax is already in the tax authority’s bank account. This can occur in cases in which a number of successive provisional tax assessments for the same year have been imposed that vary in amount. No tax interest is charged on interim refunds, in order to prevent “saving at the tax authorities”, but tax interest is charged for the entire period on subsequent additional taxation. Although the text of the law leads to that outcome, the Tax Division, concurring with the Advocate General, ruled that the legislative history and the legislator’s desire to align with the default interest regimes in the General Administrative Law Act and the Civil Code lead to the assumption that it cannot have been the legislator’s intention to charge interest for a period in which no principal is due.
In 2022, taxpayers continued to rely on the prohibition of discrimination as a fundamental right in the event of different tax treatment of cases they consider to be similar, which reliance was often in vain because the legislator has a wide margin in assessing whether cases are similar and, if so, whether there is a good reason to nevertheless treat them differently. For instance, the Tax Division ruled in ECLI:NL:HR:2022:273 that the legislator could exclude the deduction of relatively small remunerations for co-working paid by one spouse to the other because the legislator could reasonably opine that more control and enforcement problems arise in the case of spouses than in the case of other persons. One of the reasons for this is that it is difficult to determine whether the work for which the remuneration is paid involves more than the mutual aid and assistance customary between spouses. In ECLI:NL:HR:2022:752, on the other hand, the reliance on the prohibition of discrimination under Article 1 of the Constitution did indeed lead to the opinion that the exclusion of cases regarding private motor vehicle and motorcycle tax and property tax (OZB/WOZ) from a higher compensation for litigation costs constituted unjustifiable discrimination because no objective and reasonable justification was provided.
Overall, the numbers and subject matter of cases brought and decided upon in 2022 did not differ much from those in 2021.
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