A turbo liquidation is a quick way to wind up a private limited company (BV), public limited company (NV), foundation or other legal entity. This is only possible if there are no longer any assets in the company. In other words, the legal entity is no longer carrying out any activities and no longer has any assets. A foundation for carrier pigeon breeders was dissolved in this way in 2017. Or at least, that was the intention. The tax inspector has issued additional tax assessments totalling over €350,000. Can these assessments still be imposed on a legal entity that has ceased to exist?
Dissolution without liquidation
The foundation was established in 2012. Its aim is to promote the breeding and protection of racing pigeons. The directors are a man, his wife and his sister. On 31 December 2017, the board decided to wind up the foundation. The board completed Form 17a at the Chamber of Commerce. This states that the foundation has no assets. No liquidation will take place.
Tax returns tell a different story
The foundation continues to file corporation tax returns following its dissolution. The 2017 tax return lists assets amounting to €19,449. This amount also appears in the returns for 2018 and 2019, now listed as cash and cash equivalents. This is remarkable for a legal entity that claims to have no income. The FIOD provides information to the tax inspector and an audit of the accounts follows. On 17 December 2019, the inspector issues additional corporate income tax assessments for 2014 and 2015 and an assessment for 2016. The tax enforcement officer serves the assessments on the director at his last known address.
Registration with the Chamber of Commerce is not proof
The court rules that registration with the Chamber of Commerce does not prove that the legal entity has in fact ceased to exist. That statement must also be correct. The parties may rebut the presumption that the notification is accurate. The inspector succeeds in doing so. The tax returns for 2017, 2018 and 2019 show that the foundation did in fact have income. In 2023, there were still two bank accounts in its name with a total balance of over €19,000.
Turbo liquidation only works without income
The foundation claims that it carried out a ‘turbo liquidation’. According to the Court of Appeal, this establishes that the assets have not been liquidated. A ‘turbo liquidation’ only applies if there are genuinely no assets. That was not the case here. The foundation knew, or ought to have known, that the notification to the Chamber of Commerce was incorrect. After all, it continued to submit corporation tax returns itself following the dissolution, in which it listed assets. An appeal to the principles of legitimate expectations or legal certainty therefore fails. The foundation has been dissolved but has not ceased to exist.