Registration with the Chamber of Commerce indicates who the business owner is, but what matters is who actually runs the business.
Commercial Register
A case was heard at the District Court of the Northern Netherlands case in which the parties concerned, X and Y, have been living together since 1986 and have two children. A sole trader business registered in Y’s name has been listed in the Commercial Register of the Chamber of Commerce since 2008. The business activities consist of research, analysis and the production of biotechnological products. However, the Court concluded that it is not Y, but X, who is the actual entrepreneur.
Research
The Tax and Customs Administration has concluded that X is the business owner, following an audit in which invoices, ledger entries and correspondence were requested from the sole trader’s customers. The customers have also stated that X was the company’s point of contact for them. During the audit, too, it was X, not Y, who acted as the point of contact for the Tax and Customs Administration. Suppliers issued invoices in X’s name.
The sole trader’s assets included three bank accounts: two in Y’s name and one in the name of the couple’s daughter. The Court considers that X was able to access the company’s funds via the bank account in the daughter’s name.
BV
It is also important to note that in 2017 (the year in which X and Y’s relationship ended), X set up a private limited company, of which he holds all the shares and is the sole director, which develops and manufactures food supplements, cosmetics and agricultural fertilisers. It is not clear to the Tax and Customs Administration whether the sole trader business was transferred into the private limited company. If that is the case, a substantial amount of goodwill must be accounted for and X must receive at least a customary salary from the private limited company. If that is not the case, income must still have been derived from the sole trader business. In light of these considerations, the Court does not consider the Tax and Customs Administration’s estimate of X’s income for 2017, at €100,000, to be unreasonable. The Court also considers the penalties for tax offences (totalling €112,000 over four years) and the calculated tax interest to be appropriate and justified, on the understanding that the penalties are reduced in view of the excessive length of the proceedings.