A man holds all the shares in a holding company that participates in the family business. The holding company has a current account receivable from him. This receivable has been on the balance sheet for many years and is steadily increasing to €314,136 in 2016. No repayments or interest payments are made. The man self-declares the debt in his income tax returns for Box 3. In 2015, he steps down as a director. A foundation takes over the management. In May 2016, the man and the holding company enter into a settlement agreement stating that, after investigation, the current account debt is found to be ‘unfounded’ and is waived. At the end of 2016, the holding company is dissolved.
Never existed?
The inspector classifies the remission as a regular benefit from substantial interest. Half is taxed on the husband, the other half on his wife. The husband argues that the debt never existed. His father and brother did the administration of the family business and holding company. He was not involved in that himself. The entries were wrong. An accountant allegedly established this in a report, but the man does not know that accountant's name and has never seen the report.
Own responsibility
The court did not go along with the defence. The claim was in the holding company's corporation tax returns as well as in the husband's own income tax returns for years. Professional advisers prepared those returns without questioning the claim. The man himself signed the settlement agreement waiving the debt. As a dga, he had his own responsibility for tax obligations. That he left the administration to others is for his account and risk. The court finds proof that the debt existed and that the waiver is a disguised distribution.