Anti-tax evasion measures offered for Internet consultation

The Dutch Finance Ministry has just offered for Internet consultation a foursome of proposed measures aimed at working against particular tax structures that from a public perspective are regarded as unwelcome even though strictly speaking they do not cross the line. Two of the tax collection measures, all of which have been designed to counteract some of the most commonly occurring tax evasion ploys, expand the scope for holding third parties liable, whereas the other two are aimed at doing away with formal liability impediments by introducing a novel method of serving dissolved legal entities with tax assessment notice and expanding the disclosure duty to include the presumably liable.

The first measure deals with the liability resting with beneficiaries and comprises a scheme for holding the beneficiaries of a particular act or action liable on condition that:
(i)    the act or action in question has been performed on a non-mandatory basis,
(ii)   the act or action in question has duped the Tax and Customs Administration where it concerns the latter’s scope for recovery, and
(iii)  both the tax payer and the beneficiary have been in on the injurious act or action.

The second measure provides for expanding the scope for recovery from heirs by augmenting the maximum amount for which an heir may be held liable for the deceased’s tax debts or debts owing to liability by the amount having been gifted to him or her by the deceased in immediate anticipation of the latter’s passing.

The third measure introduces an alternative method for serving tax assessment notice. Third-party tax debt liability is contingent upon notice of the underlying tax assessment being validly served on the relevant third party, which in the event of the tax debtor in question being a legal entity having been dissolved and having had its affairs wound up will call for a court order reopening said entity’s liquidation, as something which for legal entities incorporated under non-Dutch law may turn out to be unviable. This has inspired the (proposed) launch of an alternative method for serving tax assessment notice on legal entities having (presumably) ceased to exist, as follows. The Collector of Taxes makes the tax assessment known by handing over or forwarding the assessment notice to the Public Prosecution Department of the District Court within whose jurisdiction the legal entity was most recently known to be established or to the Hague District Court, with a copy of the assessment notice being published in the Government Gazette as well as copies being handed out to the legal entity’s most recently known executive director, shareholder and liquidator.

The fourth measure is aimed at expanding the existing disclosure duty for tax debtors and those having tax debt liability to include any presumably liable person or party whom (which) the Tax and Customs Administration has not yet served with formal notice of liability. Practice has shown that the existing disclosure duty can fall short of enabling a decision being made as to whether a particular person or party may be held liable for a particular tax debt. The proposed expansion of the disclosure duty is to be confined to information having potential tax collection relevance.

Stakeholders are invited to comment on the proposed measures by the 28th of September 2017 at the latest.

Don’t forget to read: Clamp-down on tax dodging

Dutch version: Internetconsultatie maatregelen belastingontduiking