A Dutch Supreme Court ruling confirms that a material error in a corporate income tax return can shift the burden of proof to the company. The heavier burden can apply to the full disputed assessment, not only the rejected cost.
Why this matters
An assessment that matches the return is not proof that the inspector checked every entry. In an audit, the inspector may trace a deduction through the invoice, contract, delivery record, and creditor balance. If a material cost lacks evidence, the company may have to disprove other corrections. That takes adviser time and can disrupt cash forecasts, tax provisions, dividend plans, and lender talks.
Example
Here, a BV reported taxable income of €374,423. After an audit, the inspector reassessed it at €2,119,352. The file included an unpaid consulting invoice for €250,000. The company could not prove that the service was delivered. The Supreme Court confirmed that this defect could trigger a heavier burden of proof for the full disputed assessment. The inspector must still use a reasonable estimate.
XTROVERSO tips
- Trace unusual costs from start to finish. For each material cost, keep the business purpose, approval, contract, delivery record, invoice, ledger entry, and payment or creditor balance in one file.
- Review old unpaid invoices. Check whether the supplier is still owed money, whether the service was delivered, and whether a dispute or credit note exists.
- Match the return to the final accounts. Record the reasons for material differences between the tax return, annual accounts, and reconciliation file.
- Give each large cost an internal owner. Name the person who can explain the purchase, confirm approval, and locate the deliverables.
- Check the file at each close. Review large advisory costs, management charges, and year-end entries each month or quarter, while emails and staff knowledge remain available.
Want a practical review of material costs and the records behind your tax return? We can identify gaps before they become a dispute
The data, sourcing, and analysis behind this article were conducted by Linda Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan before publication.
References
- Rechtspraak - Supreme Court ruling on full reversal and aggravation of the burden of proof
- Wettenbank - Statutory basis for reassessment and the heavier proof position
- Belastingdienst - Official administration, retention and controllability requirements
- Belastingdienst - Invoice retention and authenticity of digital evidence
- Onjuiste aangifte leidt tot omkering voor hele aanslag - Taxence
- Parket bij de Hoge Raad via Rechtspraak - Official pre-ruling legal analysis in the same case
