Evidentiary presumption of the demerger facility is contrary to the Merger Directive

Case

This case concerned a Netherlands-based group that included, among other things, a funeral insurance company (‘the interested party’), of which all shares were held by a Luxembourg-based company (‘the shareholder’). One of the other companies belonging to the group was a life insurance company that the interested party was forced to sell to a third party. The interested party informed the Tax Inspector of its intention to structure the sale through a demerger, with the entire company – apart from some assets – being transferred by universal title rather than by a transfer of assets and liabilities. The shares in the acquiring company were sold to a third party within three years of the demerger.

The interested party requested the Tax Inspector for advance certainty as to whether the demerger facility of Article 14a(2) of the Corporate Income Tax Act 1969 could apply. However, the Tax Inspector rejected this request because, in their opinion, one of the requirements of this facility had not been met, which was demonstrating that the demerger was not predominantly aimed at the avoidance or deferral of taxation.

Judgment of the Court of Appeal

The Court of Appeal had to decide whether the demerger was predominantly aimed at the avoidance or deferral of taxation as referred to in Article 14A(6) of the Corporate Income Tax Act 1969. It was established that the shares in the acquiring company had been sold to a third party within three years of the demerger. On the basis of the last sentence of Article 14A(6) of the Corporate Income Tax Act 1969, there is a legal presumption in such cases that business motives are absent, unless rebuttal evidence is provided. Nevertheless, the Court of Appeal ruled that the interested party had failed to do so. The interested party then lodged an appeal in cassation.

Contradiction with the Merger Directive

The key question before the Supreme Court was whether the evidentiary presumption in the last sentence of Article 14A(6) of the Corporate Income Tax Act 1969 is compatible with the Merger Directive. The case law of the Court of Justice of the European Union shows that Member States may not apply a general presumption of abuse. Each transaction must be assessed on the basis of all relevant facts and circumstances.

The Supreme Court ruled that insofar as the last sentence of Article 14A(6) of the Corporate Income Tax Act 1969 leads to an automatic assumption that business motives are absent – without the Tax Inspector having to provide at least a prima facie case – that provision is contrary to the Merger Directive. To that extent, the statutory evidentiary presumption may not be applied. Furthermore, the Supreme Court considered that if the shares are sold to a third party within three years of a demerger, this does not automatically mean that business motives are absent. This likewise applies if there had already been an intention to dispose of the shares before the demerger.

From this it follows that the Court of Appeal incorrectly allocated the burden of proof. The Tax Inspector was not permitted to only dispute the business motives put forward by the interested party, but should at least have provided prima facie evidence that business motives were absent or that there were indications of avoidance or deferral of taxation.

The Court of Appeal’s decision was overturned and the case was referred to the Court of Appeal in 's-Hertogenbosch. As part of this, the Supreme Court noted that in assessing whether the demerger took place on the basis of business motives, the decisive issue is that both the ultimate goal and the chosen path to achieve that goal are based on business motives. It cannot be ruled out that shareholders’ motives, too, qualify as business motives.

Source:

• Supreme Court 27 February 2026, 22/04085, ECLI:NL:HR:2026:298