The tax authorities had imposed an additional sales tax assessment on the cleaning company for the period 1 July 2014 to 31 December 2014. The amount involved was €271,221, plus a further €17,569 in tax interest.

The cleaning company disagreed, saying it would form a fiscal unity with a hospital. But the Inland Revenue found that the required financial and organisational interconnectedness was not sufficiently met to constitute a fiscal unity.

Financial interconnectedness

Contrary to the inspector's argument, the court held that there was financial interdependence as one company (the hospital) held the majority of shares - with associated majority of control rights - in the other company (the interested party).

No organisational interdependence

However, in the court's opinion, the requirement of organisational affiliation is not met. It does not follow from what the interested party has argued with regard to the control relationship, the appointment of directors and decision-making by the general meeting of shareholders that the interested party was in a de facto position of subordination in relation to the hospital during the period in question.

According to the court, the fact that, contrary to the above, the interested party was in fact in a position of subordination vis-à-vis hospital during the period of post-tax levies has not become plausible.

Subsequent taxation justified

Therefore, the court ruled that the requirements of the fiscal unity (mentioned in Section 7(4) of the OB Act) are not met. The inspector therefore correctly imposed the additional tax assessment.

Source: Jurisdiction, ECLI:NL:RBZWB:2021:3550