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Tax litigation

Tax proceedings can cover a wide variety of issues, including a difference of opinion with the Dutch Tax and Customs Administration about how to interpret a statutory provision or the facts. The proceedings will typically start with a tax assessment, which is open to objection. If the parties do not come to an agreement during the objection procedure, the matter can be referred to the tax court.

Our lawyers have vast amounts of experience in tax litigation. Not every matter, however, will necessarily end in court proceedings. When deciding on a defence strategy and preparing an action plan, we will always keep open the option of reaching a compromise. The objection procedure tends to be the first step towards this because it gives the taxpayer the opportunity to engage with a different tax inspector.

Objection procedure

During the objection procedure, a taxpayer has the right to inspect their file (Section 7:4 of the Dutch State Taxes Act). By inspecting the documents relevant to the matter, the taxpayer may come across information that can turn things around, for instance about the start of an audit or a potentially new fact identified by the tax inspector. The taxpayer also has the right to a hearing. The hearing is a crucial step in the process since it can bring the parties together on the issues that are and are not in dispute. The tax inspector is expected to listen to the taxpayer when they explain the background of the matter and provide input on resolving the issue. The objection procedure will culminate in a settlement agreement or a decision on the objection that is open to appeal before the tax court.

Tax court proceedings

Our lawyers will start by weighing up the chances of success of, and the risks attaching to, the lawsuit based on their knowledge and experience. We will study your file and listen to your side of the story to determine your procedural position. This is how we decide what our line of defence will be. What would be the best way to convince the court to rule in your favour? Do we focus on the legal aspects or rather on the facts? We will sit down with you to discuss all this.

Tax litigation is like a game of chess. You need a strategy for every move you make and for countering the other party. The issue of the burden of proof is crucial in this regard. Who shoulders it? Can it be reversed or increased? This is also part of our defence.

We will not lose sight of options for resolving the issue, even while the proceedings are ongoing. If you are unwilling to consider such options or they are unavailable, we will continue to litigate and refer the matter to the court of appeal if necessary. In doing so, we will also make allowance for the fact that you might want to lodge an appeal in cassation to the Dutch Supreme Court. An appeal in cassation calls for a different strategy than proceedings before a lower court; this also lies in our area of expertise.

Expedited tax proceedings

A judgment by the Dutch Supreme Court does not always have to be preceded by proceedings before a lower court and the court of appeal. In proceedings involving a question of law or a question of both law and fact that pertains to the interpretation of a legal concept, a lower court can refer the matter to the Supreme Court for a preliminary ruling. After the Supreme Court has delivered a ruling, the lower court can apply the Supreme Court's interpretation. This can expedite the proceedings significantly.

Another way to expedite proceedings is by skipping over the court of appeal and bringing a leap-frogging appeal to the Supreme Court. Leap-frogging is subject to the consent of the Ministry of Finance.

Test case

We can bring a test case if a question of law is potentially an issue in multiple proceedings. Here too, a preliminary ruling can help to expedite things and give certainty to a large number of taxpayers sooner. Test cases are brought about tariff classification in VAT matters, for instance, or about the application of EU law. Our lawyers have experience in bringing test cases and would be happy to help you explore your options.

European law

European law is increasingly making its mark on national tax law, one reason being that Member States are required to transpose a growing number of EU directives into their national law and another that more cross-border transactions and checks are being performed, to which the freedom of movement applies. Whenever we conduct tax proceedings, we always look at whether the taxpayer might be able to rely on European fundamental rights, like the principle of defence, the principle of proportionality and the principle of effectiveness.

The Charter of Fundamental Rights of the European Union (the Charter) also includes a number of rights that can be invoked, like the right to privacy, the right to legal assistance and the right to a fair trial. These rights typically correspond to the rights set out in the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). Reliance on the Charter opens up opportunities for requesting a preliminary ruling from the European Court of Justice (CJEU). This is easier to do than filing a complaint with the European Court of Human Rights because that court will not accept complaints unless the matter in question has been litigated before the Supreme Court.

Please do not hesitate to contact us if you want to find out more about your options in tax proceedings or you want us to determine your procedural position.

Contact our specialists

A.A. (Anke) Feenstra

P.J. (Peter) van Hagen

A.J.C. (Angelique) Perdaems

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