Legal division and presumptions of evidence: less automatism, more real review

Why this topic is relevant for startups and scale-ups

For young growth companies, a reorganization is rarely a purely fiscal exercise. A carve-out may be necessary to make a business unit saleable, to define risks, to get an investor involved, or to place a certain activity in a separate company. In these types of processes, the tax facility in the event of a legal division is often important, because a direct settlement can make the transaction unnecessarily difficult or even unworkable.

At the same time, the law includes an anti-abuse provision that disables the facility if the division is primarily aimed at avoiding or delaying taxation. In addition, there was an additional threshold: if shares in the split or acquiring company were sold to an unrelated party within three years, business considerations were deemed to be absent unless the taxpayer made otherwise plausible. This is a tough position of proof, especially in an M&A context where a sale can actually be the logical end goal of the restructuring.

The problem with an automatic presumption of unbusiness

The crux of the recent development is that such automatism conflicts with the framework of the Merger Directive. If, in practice, national legislation quickly leads to abuse being assumed without a concrete fact-finding, it moves towards a general presumption of tax avoidance. And that is exactly not the intention. In the event of reorganizations, the transaction as a whole must always be considered. A predetermined schedule that pushes the burden of proof entirely on the taxpayer on the basis of one objective fact, such as a share sale within three years, is not a good fit.

It is also important that tax motives are not automatically fatal. A reorganization can have multiple goals, including tax considerations, and still be based on business considerations. The limit is only really crossed if the tax motive is decisive and the application of the facility would conflict with the purpose and scope of the Merger Directive. That is a much more precise test than the idea that a later sale alone says enough.

A sale after the split is not automatically abuse

In practice, it is particularly important that the mere fact that shares are sold to a third party shortly after a division does not necessarily mean that business considerations are missing. This applies even if, before the decision on the division, there was an intention to sell those shares. In other words: a proposed exit and a legal split can go hand in hand without automatically justifying an abuse label.

This is an essential point for startups and scale-ups. In tech practice, a structure is often adjusted correctly with a view to a subsequent transaction. For example, splitting off an activity that is better suited to a strategic buyer, or discontinuing a component in which an investor enters. The lesson then is not that a sales plan is problematic, but that you should be able to explain why the chosen route is commercially viable. The presence of a sales intention is therefore not the end of the conversation, but the beginning of the substantive analysis.

Not only the end goal matters, but also the chosen route

An important point of nuance is that not only the end goal should be business, but also the way to get there. This means that a company is not done with finding that a sale in itself is understandable or commercially desirable. It must also be possible to substantiate why a legal division was chosen, rather than, for example, an asset-liability transaction or, where relevant, a sale of the existing participation. In the reference instruction, that comparison is explicitly made relevant.

This is where founders, CFOs and legal teams have a practical task. Those who are preparing a reorganization would do well to define from the outset what the end goal is, which alternatives were considered and why they were less appropriate. Not in abstract terms, but in a transactional story that still stands up months later. After all, the tax assessment is not just about the outcome, but about the business logic of the chosen design.

The burden of proof no longer automatically lies with the taxpayer

Perhaps even more important than the substantive norm is the shift in the burden of proof. The inspector is not sufficient to substantiate the business reasons put forward by the taxpayer. At least some evidence must be provided that business considerations are missing, or that there are indications of evading or deferring taxation in the relevant sense. That is a fundamental difference.

For entrepreneurs, this makes the legal position more balanced. The discussion should not start from the assumption that the taxpayer should exonerate himself from abuse as soon as a legal trigger has been hit. First, the tax authorities must make it sufficiently concrete why, in the specific case, there are doubts about the business nature of the transaction. Only then does the taxpayer's backlash really come into play. This is not only legally purer, but also more practical in an acquisition process where timing, documentation and deal dynamics are often already complex enough.

Shareholder motives are not necessarily suspicious

It is also relevant that shareholder motives do not automatically fall outside the scope of business considerations. The desire to sell activities can therefore, depending on the context, be part of a business rationale. That takes the sting out of an oft-heard reflex that a shareholder-driven transaction would by definition be a tax suspect. It's not that simple.

For venture-backed companies and founder-led companies, this is an important signal. Many strategic choices are simply made at shareholder level, for example around an exit, a carve-out or a cleaning up of the group. The mere fact that the reason lies with the shareholder does not make the reorganization inevitable. Ultimately, the decisive factor remains whether the chosen transaction in its entirety can be declared business and is not primarily designed to evade taxation or to defer incompatible taxation.

This discrepancy may well have an effect on other evidence.

The most interesting follow-up question is how far this line extends. In any case, it is obvious that a substantively identical presumption of unbusiness at the corporate merger facility will come under the same pressure. This is also explicitly seen in the source. In addition, it highlights the possible relevance for a comparable anti-abuse structure that existed until 1 July 2025 under the division exemption in transfer tax.

This also makes sense for a broader idea: where a legal presumption of evidence without an individual fact-finding, and without a start of evidence from the inspector, actually amounts to a general suspicion of abuse, tension arises with the EU legal framework. This does not mean that every presumption of evidence is immediately unsustainable. It does mean that the legislator and practice must take a critical look at evidence structures that, based on one formal circumstance, place the burden of proof almost entirely on the taxpayer. It is precisely at that point that this conflict may therefore have an effect on other evidence.

What startups and scale-ups should do with this in concrete terms

In practice, the most important takeaway is not that reorganizing is now risk-free. Rather, the lesson is that good documentation is still essential, but that the tax authorities can't get away with mere automatism. A startup or scale-up that is considering a legal split in the run-up to an investment or sale must therefore be able to explain clearly: what is the commercial end goal, why is that goal business, and why was this route chosen.

This requires a file that contains more than just tax memos afterwards. This includes consistent decision-making, board papers, transaction documentation and a clear substantiation of alternatives. Especially when the route involves divestment followed by share sales, it is wise to explicitly state why that structure fits better operationally, legally or commercially than other routes. Not because it automatically solves everything, but because the real test is now about concrete facts and business logic.

Conclusion

For reorganizations, this is an important correction to an excessively broad evidence mechanism. A subsequent sale of shares does not automatically make a legal division inconclusive, and the burden of proof should not simply be passed on to the taxpayer through a general presumption. This is good news for startups and scale-ups: not because the tax bar is lower, but because the assessment should be more about the real business reason for the transaction, and less about automatic suspicion based on a single formal basis.

[1] Hoge Raad 27 februari 2026, 22/04085, ECLI:NL:HR:2026:298