The Dutch Supreme Court has ruled that the tax authorities improperly assumed a company was structured to avoid taxes, a decision with potential ramifications for how the government assesses corporate tax liabilities. The ruling, delivered on February 26, 2026, centers on the so-called “three-year presumption” used by the Belastingdienst (Dutch Tax and Customs Administration) when evaluating business restructurings.
The case involved a company that underwent a business division, prompting the tax authorities to automatically presume the restructuring was motivated by tax avoidance, triggering additional tax assessments. The Supreme Court found this presumption to be in violation of the EU’s Merger Directive, which governs cross-border corporate reorganizations. According to the court, the law requires concrete evidence of tax evasion intent, rather than relying on a time-based presumption.
The “three-year presumption” allowed the tax authorities to assume a tax avoidance motive if a business division occurred within three years of a sale. The court’s decision effectively invalidates this practice, requiring the Belastingdienst to demonstrate a specific intent to evade taxes on a case-by-case basis. This ruling aligns with previous judgements, including the “Kerstarrest” of December 24, 2021, which initially found the box 3 tax system discriminatory when the fixed return exceeded actual earnings.
The implications of this ruling extend beyond the specific case at hand. It signals a broader shift in the burden of proof, placing greater responsibility on the tax authorities to substantiate claims of tax avoidance. The Hoge Raad’s decision on February 26, 2026, builds upon earlier rulings from June 6, 2024, and subsequent dates, which further clarified the rules for calculating actual returns in box 3 investments.
The ruling comes as the government grapples with the financial fallout from previous Supreme Court decisions regarding box 3 taxes, where investors are now entitled to refunds if their actual investment returns were lower than the fixed rates used for taxation. Earlier estimates from demissionary State Secretary Marnix van Rij indicated a potential loss of over €4 billion to the treasury, with ongoing annual losses until a system based on actual returns is fully implemented. The current governing coalition of PVV, VVD, NSC, and BBB did not account for this financial impact in their governing agreement.
The Supreme Court’s decision similarly echoes concerns raised in a separate case regarding the box 3 tax system, where the court determined that the system continued to be discriminatory even after adjustments were made following the 2021 “Kerstarrest.” The court found that the fixed return remained problematic when it exceeded actual investment earnings, violating both the European Convention on Human Rights and property rights protections.
As of February 28, 2026, the Belastingdienst has not issued a formal response to the latest ruling, and it remains unclear how the agency will adjust its procedures to comply with the Supreme Court’s decision. A legislative response to the rulings is expected, but no timeline has been established.
