The tax administration’s duty of care in question

A Dutch entrepreneur got into trouble with his company during the previous credit crisis. He came up with a creative solution: he asked his insurer for his accrued pension capital and temporarily transferred it to the company, with the intention of replenishing that capital as soon as his equity had recovered. He didn’t factor the tax official in the equation, however. If pension capital is withdrawn prematurely, it should be taxed – not under the advantageous tax regime which governments apply to encourage their citizens to save for retirement, but at the full rate

The Dutch entrepreneur decided not to give in without a fight. He filed an objection and went through the entire tax procedure, before appearing before the Supreme Court a decade later, the equivalent of the Belgian Supreme Court. He argued that the government treats other persons more favourably and that his personal circumstances were not taken into account. Yet, he had to back down before the Supreme Court. 

René Niessen, the Advocate General of the Supreme Court, did provide suspense, however. He asked whether governments should not have a duty of care towards their citizens. Considering that tax law is a maze in which even the most experienced tax consultant often gets lost, it would have been surprising if the unfortunate entrepreneur had had sufficient prior knowledge. The fact that he clearly did not pull off a tax trick was also in his favour. It was a case where “a taxpayer who does not specialise in tax law becomes entangled in tax snares“.


The tax administration’s duty of care towards the taxpayer is one of the general principles of good governance.

Niessen listed the legislation that protects the citizens in various situations, when faced with a complexity beyond their understanding. For example, employers have a special duty of care towards their employees and the banks have a duty of care towards their customers. What, indeed, is the role of the MiFID directive? The Markets in Financial Instruments Directive introduced the principle across Europe that financial institutions must ensure that investors are protected, both against financial institutions and against themselves. It is a fact that investors do not always have sufficient expertise to make judicious decisions.

So, why shouldn’t the government itself be held to a duty of care? The fact that there is no legislation on the matter should not be a problem. Niessen deduces this duty of care from a number of laws in administrative law. He concludes that the tax administration’s duty of care towards the taxpayer is one of the general principles of good governance. Under Belgian law too, it is possible to build up a reasoning in exactly the same way, with the same general principle of good governance as a conclusion. Which actual steps did the Dutch Supreme Court take on the basis of the Advocate General’s advice? None. The Supreme Court left the matter on the back burner and has yet to rule on it. Even though it is a pity that such an opportunity was missed, it does not mean that the debate is closed. Quite the opposite, it will become clear within a decade that the Advocate General’s plea was a warning shot. The debate on the new legal relationship between the tax administration and the taxpayer can start with this. And let’s hope that the Dutch Advocate General will then be remembered deservedly as the Montesquieu of the new tax legal relationship. He is a man after my own heart.

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