Good news for entrepreneurs with a PLC: the Supreme Court has given short shrift to the increased tax interest rate for corporate income tax. For years, corporate income taxpayers paid 8% of interest, while other taxpayers were only charged 4%. This unequal treatment, according to our highest court, violates the principle of proportionality. The higher rate thus disappears from the table. How did the Supreme Court reach this verdict?
Nearly a tonne in interest
A PLC files a corporate income tax return for 2021 in June 2023. The inspector issues a provisional assessment and charges €90,969 in tax interest. The rate at that time: 8%. The bv objects. Why is it paying double the rate for other taxes? In November 2024, the North Netherlands court rules in favour of the bv and declares the regulation non-binding. The state secretary does not accept this and appeals in cassation.
Trading interest? Far-fetched
The state secretary defends the higher rate with a creative argument. Corporate income taxpayers are entrepreneurs who operate in trade. Aligning with the statutory commercial interest rate is then an obvious step, according to the State Secretary. The Supreme Court sees through this. A tax debt that has yet to be formalised is not a trade debt. The comparison is flawed.
Treasury filling is allowed, discrimination is not
The scheme primarily serves a budgetary purpose. A budgetary purpose is itself recognised as legitimate by the Supreme Court. But an increase in burden that is mainly to fill the treasury cannot be placed on only one group of taxpayers without good grounds. There is no justification for this selective increase in interest rates. The principles of proportionality and equality have been violated. The Supreme Court declares the relevant provision of the Tax and Recovery Interest Decree non-binding.
What does this mean for you?
For corporation tax, the same interest rate applies again retrospectively as for other taxes. Have you objected to tax interest? If so, you can claim a reduction. Have you not yet lodged an objection? If so, check whether the objection period is still open. This ruling offers opportunities.