March 7, 2023
Where the Tax Authorities used to get away with evidence based on suspicions, this will no longer be possible. On January 13, 2023, the Supreme Court confirmed that for the presence of gross negligence, the Tax Authorities must also convincingly demonstrate the required facts and circumstances.
Gross negligence is a punishable offense under tax laws in many countries, but it is not enough for the Tax Authorities to simply claim that a taxpayer acted with gross negligence. In a recent court case, the Supreme Court ruled that the Tax Authorities has not demonstrated the presence of gross negligence sufficiently convincing. In line with a previous Supreme Court ruling, the Supreme Court once more made it clear that in case of doubt, the benefit of the doubt must be given to the taxpayer.
According to the Supreme Court, the required facts and circumstances must be established beyond reasonable doubt by the Tax Authorities in order to assume the presence of gross negligence resulting in a punishable offense. This is in accordance with the formulation “doen blijken” in the tax legislation. That concept means that the relevant facts and circumstances must be convincingly demonstrated. The Supreme Court confirms with this ruling that the Tax Authorities must also convincingly demonstrate the required facts and circumstances for the presence of gross negligence. They must demonstrate this fact convincingly, using evidence showing a conscious disregard for one’s tax obligations. In the event of doubt, the benefit of the doubt must be given to the taxpayer.
Key attention points for taxpayers include the following:
By following these key attention points, taxpayers can reduce the risk of being penalized for gross negligence and ensure that their tax obligations are met.