Supreme Court Rules Tax Authorities Must Prove Knowing Participation in Carousel Fraud

The Supreme Administrative Court overturned a first instance judgment in a tax carousel fraud case, establishing important precedents for burden of proof requirements
The court ruled that tax authorities must prove their claims when alleging a taxpayer knowingly participated in tax fraud, and that fraud by one entity does not automatically contaminate the entire transaction chain
Each participant in a transaction chain must be assessed individually, with conclusions applying only to the specific taxpayer under scrutiny rather than all parties involved
Tax authorities cannot arbitrarily switch between accusations of knowing participation in fraud versus failure to exercise due diligence without proper analysis and evidence
This ruling significantly limits the previous practice where tax authorities would alternate between different accusations to avoid having to prove taxpayer awareness of fraudulent activity

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.