Shirley de Jong Rechtbank Amsterdam

From the 14th of February onwards, not only a tax evader is responsible for the damage caused by tax evasion, but also the trust agency and its employees who helped the tax evader. This was stated in the judgment published by the court of Amsterdam, in the case between the tax authorities and Tradman, which was a former trust agency active between 1991 and 2008. From 2004 onwards, it has been known as Tradman, before it was known as B.V. European Trust Services Amsterdam and Amicorp Netherlands B.V., and in 2008 it became part of TMF Group.

The tax evaders were Jos and Joop Geerts. They owned approximately 160 companies, and in every company the shareholders and board members changed extremely frequently. In 2004 an investigation was started on one of the companies of Geerts. In 2007 all the companies owned by the duo went bankrupt, and the tax authorities stated that these companies did not pay 22 million euros of corporate tax. Eventually the tax authorities discovered these tax liabilities, and in 2008 the trial began between the tax authorities and Jos and Joop Geerts. In 2013 Jos Geerts was sentenced to 30 months in jail, and Joop Geerts with 24 months in jail, however, after appealing to their sentences, the Court of Den Bosch decided in 2017 to decrease their sentences to 21 and 16 months respectively. There is still a possibility that Geerts might go to the Supreme Court, so the sentence might change.

But what was the role of Tradman with these shady activities? Tradman took care of the administration of the companies of Geerts between 1994 until the end of 2006. Based on these documents, which were seized in 2009, suspicion rose that Tradman was not completely innocent in this case. The trust agency itself, a former director and manager helped the brothers with a particular kind of tax evasion, namely cash companies. They had many companies that were only companies by name, which were not engaging any business activities. The only thing those companies did do, was to store a lot of money, and of course, tax liabilities had to be paid over this money. The tax evasion took place by avoiding these tax liabilities. The tax liabilities would disappear if the money stored in these cash companies was used for large investments. A particular case was a fake investment in a holiday resort in Montenegro, which was only done to avoid corporate taxes. The tax authorities missed out on 18 million euros due to this fake investment. On paper, Geerts wrote that he did these large investments, but in reality he was channelling away these money flows. Tradman knew that the main purpose was to evade corporate taxes, they also knew most of these investments were fake. Furthermore, Tradman also helped channelling away revenues from the sale of patents and ships.

When you know how involved Tradman was, it seems logical that Tradman is also held responsible for the tax evasion. Surprisingly, this was not the case. In addition, this is the first time that a trust agency who helped tax evaders is severally liable for the tax liabilities caused by the tax evasion. Several liability means that the trust agency is held completely responsible for the liabilities towards the tax authorities, caused by the tax evasion.

The reason why this time the tax authorities even tried to collect the cash from the trust agency is very simple. The tax authorities were unsuccessful to collect the cash from the tax evaders themselves, so they tried a different way. Namely, a civil procedure against the parties who helped. According to the court of Amsterdam, Tradman had the duty, due to its social position in business and their professional expertise, to investigate whether her advice services could lead to any kind of tax evasion.

The outcome of this trial, that Tradman is severally liable, will change the role of trust agencies when they are in dispute with the tax authorities drastically. Before this judgement it was extremely difficult for the tax authorities to bring trust agencies, who helped with tax evasion, to court. But this trial will probably function as a precedent, meaning it will be used as an example for other trials in the future. Therefore, many trust agencies will be more careful when creating new constructions or giving help with channelling away money flows. Of course, it would be lovely if this trial would not have to be used as a precedent for any future cases, but there will always be tax evaders and there will always be trust agencies or any other institute to help them. Therefore, I believe that in the future this case will be used, more often than we would like, as a precedent.