In recent years, many criminal cases have been expedited using process agreements. The Supreme Court has deemed this method - in which a judge or court subjects the settlement proposal, or procedural agreement, to a reasonableness test - permissible. The judge checks also whether the agreements were made voluntarily and they do not prejudice his independent position.

Trial settlements can be attractive to both the prosecution and a defendant. The sentence that is accepted is lower than the sentence that would be demanded at trial and there is earlier clarity. This is an advantage not only for the accused, but also for those around him who sympathise with the accused in excitement.

What often remains underexposed is that the public prosecutor can share criminal case data with the tax authorities. The Judicial and Criminal Records Act offers this possibility if the data is used for taxation purposes. Although the Algemene Wet Rijksbelastingen (AWR) prohibits employees of the tax authorities from disclosing this data beyond what is necessary for the implementation of the tax law or for the collection of a state tax, this can lead to nasty surprises for years after the litigation settlement.

Up to five years after the tax year, the inspector can come up with an additional assessment if new information has revealed that the assessed aggregate income for the year 2020 was understated. In the case of foreign assets, a 12-year period applies. If, after an independent tax assessment, the tax authorities also consider that an incorrect tax return was filed intentionally, the additional assessment may be accompanied by a penalty.

For individuals who thought they could close the book with the process agreements, this can be very raw on the roof. Especially if the tax authorities or, as the case may be, the Tax Collector choose to accelerate collection. If it is feared that assets will be disposed of, the bailiff's writs of execution may already be on the mat without a reminder, threatening the foreclosure sale of assets if payment is not made within two days.

This will by no means happen in all cases where process agreements have been made, but certainly persons suspected of offences with a financial motive, such as drug trafficking, should be alert to this. After all, the tax authorities are not bound by a litigation agreement that a suspect has made with the prosecution. And an additional tax assessment does not legally qualify as a ‘double punishment’. In the case of an offence fine, however, there may be double punishment for the same offence in certain cases, which means the fine cannot be upheld for that reason alone.

If, in the unlikely event that a question letter from the tax authorities or an additional tax assessment arrives on the mat, it is important to act quickly. As a rule, strict deadlines apply. If these have expired, it can become very difficult to reverse the assessments. If a timely objection is made, it can be substantively argued that the data invoked by the tax authorities do not provide a basis for a recalculation.

When entering into litigation agreements, the tax implications should be considered beforehand. What appears to be an end point criminally may still be a beginning fiscally. In any case, should the tax authorities present themselves, ensure prompt action.

Mr. D.M. Penn