#41: Tax: a dream, or a nightmare?

On 23 and 24 May 2019 we attended the Half Year Conference of the International Association of Young Lawyers (AIJA) in Hong Kong. One of the tax sessions was devoted to the changing landscape of professional liability of tax advisors across the world. We concluded that the transition of this landscape is in full force. The title of the conference “Tax: a dream, not a nightmare” therefore seems to be too soothing on this particular matter. The actions taken by the tax authorities and the prosecutions services against tax advisors are becoming harsher.READ MORE

#40: Dutch money laundering articles are being misused

In Lawlunch #21  we brought to the attention that we are noticing a shift in the perception of the presumption of innocence. The presumption of innocence dictates that the burden of proof lays with the prosecuting authority. This also entails that in principle the right to remain silent cannot be used against you. However, In Dutch case law we see a development – especially in relation to money laundering – that remaining silent can be held against you. We fear that this development results in the lost of meaning of the presumption of innocence. Also, it results in a preference of the use of the Netherlands as a jurisdiction to prosecute international money laundering cases. The idea is that a suspect has to prove the legality of the source of the money. The thresholds from Dutch jurisprudence however is another one.READ MORE

#39: Blinded by the cause

From the previous Lawlunches it becomes clear that the fight against (tax) fraud is fierce. “Facilitators”, such as tax advisors and financial institutions, are targeted by the various government institutions as described in Lawlunch #33. In Lawlunch #37 we concluded from the annual report of the FIOD (the Dutch tax intelligence and investigative unit) that this fight against fraud by going after facilitators will continue. We also concluded that this annual report lacks a very important topic: the rights of the accused.

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#38: To proof or not to proof

Criminal judges are given a difficult task. They need to reconstruct what happened and decide whether they are convinced somebody committed a criminal offence. The Dutch system of proof gives a judge a free hand when taking this decision: he is free in the valuation of the evidence and needs to be convinced that the crime was committed by the suspect to come to a conviction. This freedom of a judge is just limited by the rules regarding the minimum of proof. The unus testis nullus testis-rule is one of the basic principles in this regard. However, this rule does not apply to police officers. If a police officer witnesses something and writes this down in an official report, this report has probative value and the unus testis nullus testis-rule does not apply. We wonder of the probative value given to an official report is legitimate and whether a decision of the court could be solely based on an official report. Before we get to that, we will first consider the decision scheme of the Court to know which questions the Court has to answer. Thereafter, we will pay special attention to the probative value of an official report.

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#37: High and mighty

While 2019 is still brand new, we have already been treated with lots of developments. Britain is keeping everyone occupied with their Brexit worries, as are the United States with the shutdown. Meanwhile the various authorities are continuously expanding their fight against fraud. This year, on 4th of January, the Dutch Tax Intelligence and Investigative Service (FIOD) published an annual report for the first time. The title of the report on 2018 is: ‘The silent revolution in the financial investigation’. In the report the FIOD looks back on the accomplishments of the last year and their goals for 2019. Reading the report however makes one wonder: are there only just accomplishments or is the FIOD getting high and mighty on itself?

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#36: The end is near…

Just a few more days to enjoy the great year of 2018! And what a year it has been.

The developments in our practice area have been both interesting and exciting as well as a bit frustrating at times. The developments however all have one thing in common; they bring a lot of opportunities. We hope to have given you inspiration to use them.

Of course we will continue to share our view on the legal developments with you in the new year. But for now; happy holidays and we wish you all the best for 2019!

# 35: What is real?

In almost every fraud case in The Netherlands forgery is part of the suspicions. The offense of forgery can be committed in two ways. It is an offense if someone intentionally makes a false document or falsifies a document that is intended to be used as evidence of any fact. The second way is to intentionally use such a false or falsified document as if it were genuine and unfalsified or intentionally deliver or possess such a document. But when is a document false or not in line with the truth? The Dutch Courts have set some boundaries with regard to question when an agreement is considered to be false.

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#34: Paper over the cracks of the system

The recent decision of the European Court of Human Rights (ECHR) of 9 October 2018 in the case of Corallo vs. the Netherlands makes us wonder whether the human rights of the European Convention are taken seriously. In this case the suspect complaints that the circumstances in his prison cell in the Sint Maarten police station where he had to await the decision on the request of Italy to extradite him were miserable. The defense attorneys had requested to ensure that his human rights would be taken seriously and therefore to suspend his arrest until a decision was taken or to take other measures. The poor decisions on these requests led to this complaint against the State of the Netherlands.

It started on 21 November 2017 when the court in Rome requested the arrest of the claimant in relation to an investigation into, amongst other things, tax evasion, money laundering and embezzlement. On 13 December 2016 Italy sent out a Red Notice via Interpol with the purpose to extradite the claimant to Italy. The claimant was arrested and stayed in a cell on the police station of Philipsburg in Sint Maarten until his extradition on 16 August 2017. At first he stayed in a cell with multiple others. Later on he was transferred to a cell on his own. His request to be transferred to a prison complex in Point Blanche instead of staying in a temporarily cell on a police station was impossible according to the authorities due to safety reasons. The claimant repeatedly requested suspension of his incarceration while awaiting the decision on the extradition request. However this was denied.

The claimant complaints at the ECHR that article 3 of the convention is breached because of the poor circumstances he was kept in for months. In the decision of the ECHR is stated that he was kept in a 16 square meter cell for the period of 13 December 2016 until 29 March 2017. Also from 4 until 12 April 2017 he was kept there. That was not a cell for him alone, he continuously had to share the cell with 5 to 6 persons.

In the decision it the circumstances are described vividly:

“The toilet in the multi-occupancy cell had leaked and had not been covered. Detainees had partitioned off the sanitary area with towels and sheets. The multi-occupancy cell had been equipped with two sets of bunk beds for four detainees. It was the rule rather than the exception that one or two additional detainees were held in the cell, who during the night would sleep on mattresses on the floor.”

 On behalf of the State it was argued that various improvements on the detention facilities of the police station in Philipsburg were made as recommended by ‘the Committee for the Prevention of Torture and Inhuman or Degrading Treatment of Punishment’ (CPT). The State further argued that because of a lack of detailed information they cannot respond to the circumstances as described by the claimant. These circumstances however were not denied. They were qualified as ‘not ideal’. However a breach of article 3 of the Convention was not the case according to the State.

The European Court however acts firmly upon this complaint of the claimant. The Court states that article 3 of the Convention has been breached because the claimant was detained for more than eight months – of which 114 days in a cell with multiple persons – in a cell of which the CPT was of the opinion that the cell is not suitable to keep detainees for a longer period than three days, and certainly not longer than ten days. The facility is simply not suitable to guarantee the minimum human rights for a longer period. The Court grants the complaint of the claimant and grants a compensation for damages of € 10.000.

This compensation of course is not more than paper over the cracks of the system the claimant had to endure. It should not be necessary to file a complaint against the State – also in areas overseas – for the miserable circumstances in prison. Human rights should be a higher priority on the agenda of the State. And not only of the State. A judge who is confronted with facts such as occurred in this case should give a strong signal to the authorities that the defense complaints cannot be put aside in such a case. Also if a solution is not easy accessible the judge still should order the authorities to put energy in finding a solution. And if that is not possible the judge should guarantee the human rights as laid down in the ECHR and suspend the detention. In our opinion that should have been the only right decision.

Do you have any questions about this subject, are you struggling with a related issue or would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.

#33: Settlements and individual accountability

On 3 September 2018, ING Bank (further: ING) accepted and paid a settlement of € 775 million offered by the Dutch Public Prosecution Service (PPS) for violation of the Anti-Money Laundering and Counter Terrorism Financing Act and for culpable money laundering (Article 420quater of the Dutch Criminal Code. The largest transaction in history for the Netherlands. Not only the amount of the transaction makes this transaction memorable. Another remarkable fact is that no individual employees or managers will be prosecuted by the Dutch public prosecution service. What is the reason for this?

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#32: Tax fraud ≠ forgery

Dutch law distinguishes so called ‘ordinary’ criminal law and criminal offences described in other laws than the Dutch Criminal Code. In case an offense is specifically punishable under the General Code on Government taxes (GCGT) this provision might be a lex specialis and therefore prevail over applicable provisions from the Dutch Criminal Code. Prevail in such a way that the public prosecutor is obliged to prosecute on the basis of the lex specialis. If a suspect is prosecuted for the provision in the Dutch Criminal Code the prosecution service should be declared inadmissible. A recent verdict of the regional court of Amsterdam, which was published on 10 August 2018, sheds more light on this issue.

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