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THE NETHERLANDS: Foreign activities of jazz player not taken into account for determining number of hours worked

Taxpayer X was born in 1950 and lived in the Netherlands. He was a jazz piano player and leader of a band. The enterprise of X is situated in the Netherlands. The band performs in the Netherlands and various other European countries. In the year at issue X realized 78,76% of his turnover outside the Netherlands (53,33% in various EU Member States and 25,43% in Switzerland). In his tax return X had claimed that he was entitled to the so-called deduction for entrepreneurs of 12,917 NLG (5,861 Euro). He submitted an overview of the number of hours worked, totaling to 1511 hours. The Tax Inspector refused this deduction, inter alia because the hours worked outside the Netherlands would not have to be taken into account for these purposes. The Court of Appeal followed the reasoning of the tax inspector. The Court held inter alia that indeed the Netherlands legislation for the application of the deduction for entrepreneurs excluded the profit on which a measure for the avoidance of double taxation was applicable (Art. 44e, fourth paragraph of the Income Tax Act of 1964). The Court explicitly held that there was no conflict with the equality principle or EC law. The taxpayer is well-advised to go into appeal against this decision. Whether or not there is a conflict with EC law seems to warrant a deeper analysis than the Court of Appeal has made. This treatment of the Court may have been triggered by the fact that X had first not even filed a tax return, and the non-appearance of the taxpayer during the Court session.

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