All persons who have been convicted as perpetrators of or accomplices to criminally sanctioned tax offences are jointly and severally liable for the payment of the evaded tax. The Court of Cassation ("Hof van Cassatie"/"Cour de Cassation") recently confirmed its previous ruling by stating that persons are also jointly and severally liable when the criminal judge declares the facts of the tax offence established, but does not convict those persons because the limitation period has expired.
Scope of the joint and several liability
The Income Tax Code, the VAT Code and the Code on Miscellaneous Levies and Taxes state that all persons convicted as perpetrators of or accomplices to a criminally sanctioned tax offence are jointly and severally liable for the payment of the evaded tax. This pertains inter alia to tax fraud whereby a person wilfully or with harmful intent violates statutory tax provisions. The liability enables the tax authorities to claim payment of the total amount of evaded tax from each person criminally convicted in the same case. It is obvious that such joint and several liability can have far-reaching (financial) consequences. For example, in a VAT carousel, the tax authorities can recover the total amount of VAT evaded from each person convicted, even if a person's participation in the VAT carousel was of minor importance.
Broad interpretation of "conviction"
In May 2014, the Court of Cassation rejected the argument that the joint and several liability does not apply when the criminal judge declares the facts of the offence established (when sentencing for the civil action), without imposing any conviction because of expiration of the limitation period in respect of the criminal action. The Court is of the opinion that the demonstration of the facts also falls within the concept of criminal "conviction".
This decision of the Court can be criticised in many ways. First and foremost, the wording of the tax statute is clear in expressly requiring a criminal conviction, and it is established case law of the Court that clear legislation does not require any interpretation. And even if the tax statute were to require interpretation, the requirement of a criminal conviction can also be found in the preparatory parliamentary documents. In addition, the Court gives a broad interpretation to the concept of "conviction", whereas it is established case law of the Court that tax provisions should be interpreted in a strict manner. Based on these arguments, we are of the opinion that the decision of the Court is contra legem and violates the constitutional principle that person can be deprived of their property except (in the case of expropriation for a public purpose) in the cases and manner established by the law and in return for fair compensation.
Can the decision of the Court be challenged?
A person finding himself in a similar situation could challenge the joint and several liability on the basis of violation of the Constitution and the First Protocol to the ECHR.