On July 28, 2021 the lower court of Gelderland in The Netherlands ruled in an interesting case. In the underlying case the court ruled that the statutory regulation to deduct specific healthcare costs for Dutch Individual Income Tax purposes constitutes an unacceptable violation of the prohibition of discrimination in the human rights treaties (in particular Article 1 of Protocol No. 12 to the European Convention on Human Rights (ECHR)). The court made this ruling in a case involving 2 males who went to the United States for a high-tech surrogacy in order to realize their wish to have children.
A gay couple from Gelderland went to the United States for a high-tech surrogacy to realize their wish to have children. One of them took the costs of part of the treatment, namely the in vitro fertilization (IVF) treatment, in account as deductible expenses in his 2016 Dutch individual income tax return. The tax authorities refused this deductible item because it was no case of infertility. Therefor the treatment costs were not directly related to illness or disability. The Plaintiff did not agree with this and appealed the tax inspector’s decision.
According to the Dutch Income Tax Act expenses for specific healthcare costs are deductible for Dutch individual income tax purposes. However it must concern expenses incurred due to illness or disability. The costs for IVF treatment are only deductible if there is a medical indication. A medical indication is issued by a doctor in case of infertility. Only under those circumstances, the Dutch tax authorities regard the costs of IVF treatment as expenses for specific healthcare costs and therefore as deductible expenses.
In the underlying case the court rules that according to the Dutch Income Tax Act the costs incurred do not qualify as expenses for specific healthcare costs since the Plaintiff is not infertile and therefore there is no medical indication.
According to the court, the legal regulations do, however, lead to an unacceptable difference in treatment between a homosexual couple compared to couples and women who, due to infertility, are unable to have a child naturally and who therefor undergo IVF treatment to realize their desire to have children. These couples and women are allowed to deduct the costs of IVF treatment. The court is of the opinion that there are no reasons to justify this difference in treatment for tax purposes. Although the court acknowledges that the legislator generally has a wide discretion in tax matters, it is of the opinion that this case concerns a vulnerable group that has been confronted with discrimination in the past. The court is therefore of the opinion that in this specific case, the legislator therefore has less discretionary powers.
And then the big twist comes. In its ruling the court states that it believes that politicians must find a solution through legislation to eliminate the unequal treatment. That can happen in different ways. The court therefore feels that it cannot rule that in the underlying case the costs of the IVF treatment are eligible for deduction. If the court were to rule in such manner, it would take the seat of the legislator and that is not allowed.
So the final outcome of the case is that the court states that the Plaintiff is right when saying that he is being discriminated, but unfortunately at the same time denying him the right take part of the expenses incurred with respect to the IVF treatment into account as deductible expenses in his Dutch individual income tax return.
If you are interested in the full text of the judgment click here to be forwarded to the judgment of the Rechtbank Gelderland of July 28, 2021, Case number: 19_6813, ECLI:NL:RBGEL:2021:3995. Please note that the text of the judgment is only available in the Dutch language.
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