Agricultural standards offer freedom in bondage

The Tax Authorities complains about the fact that agricultural entrepreneurs (read: their advisors) regularly deviate from national agricultural standards and do so with little or no sufficient motivation. These deviations mainly occur with the depreciation of assets and with inventory valuations. I do not know the number, but the question is whether the complaint is justified and whether these taxpayers are right to deviate.

The agricultural standards have been established since 1992 in consultation between the agricultural business community and the Tax Authorities. The standards mainly contain valuation criteria for determining the balance sheet value of livestock, all buildings, all machines and stocks and field inventory. These jointly established standards are unique in themselves. In no other sector is there a comparable interplay between the entrepreneur, the tax advisor and the Tax Authorities.

This agricultural standards are policy rules within the meaning of the General Administrative Law Act. The tax authorities are therefore obliged to apply those standards when assessing parts of the tax return. In view of the complaint from the Tax Authorities, the authority assumes that the taxpayer is also largely bound by these valuation standards.

A product of consultation
This is of course the idea behind establishing the standards. The agricultural standards are a product that the agricultural business community and the Tax Authorities implement annually in consultation with each other. These are not standards imposed by the Tax Authorities. This idea is also reflected in the tax return. It is assumed that these agricultural standards are adhered to and if this is not the case, this must be stated in the tax return.

That is why a specific question has been included in the tax return. Where then only a cross can be placed. An explanation cannot be given in the declaration. That's remarkable. When the tax inspector checks the tax return, he will come across this cross and it should prompt him to ask for further explanation. If the inspector does not agree with the deviation, the entrepreneur must make his case through an objection to the tax authorities and then appeal to the tax court.

It is a misunderstanding on the part of the Tax Authorities if they believe that the agricultural entrepreneur is bound by agricultural standards in the same way as the authority. An entrepreneur is free to deviate from this if there are good reasons for doing so. Of course, that misunderstanding does not exist. The Tax Authorities know exactly how it works. The authority is therefore issuing a 'crie de coeur' here: a cry from the heart. After all, drawing up standards only makes sense if the vast majority of entrepreneurs take them as a starting point for annual profit determination.

Norms and values
These agricultural standards form a balanced system of norms and values. Many aspects have been taken into account when establishing agricultural standards. There is more to it than we might be inclined to think. That is why the authors' starting point is that you may only deviate from this if there are 'real arguments' in an individual situation.

This principle means that a taxpayer (or his advisor) must consider in advance whether it is worthwhile to deviate from the standards. Because if you deviate (you place that cross), you put yourself as a taxpayer under a magnifying glass. After all, you are asking for the inspector's attention. And he looks at the specific deviation, but perhaps also at other things. After all, now that he has his tax return in front of him. You might prefer not to have that.

In short: a cross is easily made, but a procedure is not easily won. And certainly not if the burden of proof lies with the taxpayer. So look before you leap!

Eric Marcus

Erik Marcus is the owner of Remie Fiscaal Juridisch Adviesbureau, a consultancy for agricultural entrepreneurs. He likes to come up with innovative and groundbreaking solutions, especially if there is a tax advantage that can be achieved.

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