- THe Lower Court of The Hague ruled that the principle of legitimate expectation prevents the imposition of retrospective tax assessments and a penalty fine on X BV
- X BV is a contractor that uses other construction firms for building projects
- These subcontractors failed to declare and pay significant amounts of sales tax
- In 2014, a third-party investigation was conducted at X BV by the tax inspector
- The investigation report concluded that X BV legally could not claim a deduction for incorrectly invoiced sales tax due to the application of a specific tax regulation
- However, the inspector conditionally accepted the sales tax invoiced to X BV as deductible
- Another audit in 2017 on sales tax filings from 2012 to 2016 led to tax reassessments and a penalty for the years 2012 and 2013 up to mid-2014
- X BV appealed against these tax reassessments and the penalty
- The main issue was whether X BV could successfully invoke the principle of legitimate expectation regarding the reassessments and penalty
- The court found that the inspector’s statements in the 2014 report created a legally protected expectation that the tax regulation would not apply to amounts billed to X BV by subcontractors up to the date of the report
- The court rejected the inspector’s argument that EU law could not uphold this expectation
- The appeals by X BV were successful
Source: taxlive.nl
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
