Division of burden of proof on application of additional assessment period | Deloitte Nederland

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Division of burden of proof on application of additional assessment period

The inspector must demonstrate the existence of a foreign income component. Only when the extent of such foreign income needs to be determined can a reverse and greater burden of proof play a role.

25 November 2020

Power to impose an additional assessment

Under Dutch tax law, tax inspectors are essentially not allowed to go back on tax assessments they have imposed just like that. If they do, they must have new information at their disposal they had not yet been aware of, nor could have reasonably been aware of when imposing the assessment. In other words, an additional assessment is not possible if the inspector is guilty of negligence. An exception applies if the taxpayer has deliberately provided incorrect information, or if it involves a reasonably knowable error.

The period within which an additional assessment can be imposed is limited too. An inspector's power to impose an additional assessment basically expires five years after the end of the period over which the tax is payable. This is different for income and assets arisen or held abroad. They are subject to an additional assessment period of twelve years.

Division of burden of proof

Many proceedings involve issues dealing with additional assessments. In one of its judgments earlier this year, the Supreme Court ruled that the inspector is authorised to request a taxpayer for information to determine whether the power to impose an additional assessment exists. Hence, establishing such power to impose an additional assessment in advance is not necessary. And recently, it issued an opinion on the division of the burden of proof if the extended additional assessment period is applied. First and foremost, the Supreme Court states that it is the tax inspector who must provide reasonable arguments for the taxpayer having received foreign income, or holding foreign assets. If the tax inspector succeeds in meeting the burden of proof, and if the other conditions for imposing an additional assessment have also been met, he is authorised to impose an additional assessment while applying the extended term.

A reverse and greater burden of proof due to failure to file the required return or because a decision requiring information has become irrevocable, will only be considered when determining the extent of the undisclosed foreign income or assets. Otherwise, this would undermine the legal certainty of taxpayers as guaranteed under article 16 of the State Taxes Act.

Assessment by income or asset item

With this judgment, the Supreme Court builds on existing case law. In one such case, in 2018, the Supreme Court ruled that for each item of income it is necessary to assess whether the additional assessment period applies. If it also involves undisclosed domestic income, the tax inspector will have to impose an additional assessment within the regular period of five years for this income.


Source: HR 20 November 2020, 20/01138, ECLI:NL:HR:2020:1810

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