28 January 2023

Refusal and revocation of a Dutch business license

Category: Licenses

Grounds for refusal of a business license are regulated by Dutch law, regulation, policy or a combination thereof. For this reason, prior to the application, it is useful to take proper note of the legal framework within which the decision is made. After all, the applicant can adjust his or her application accordingly. Grounds for refusal may or may not be in the form of an exhaustive list of grounds for refusing a specific application. The law may contain a regulation concerning grounds for refusal or withdrawal. These grounds can be exhaustive, without the municipality being authorised to lay down further rules. For subsidies, for example, a number of (non-exhaustive) grounds for refusal have been included in Article 4:35 of the General Administrative Law Act. The subsidy scheme itself may also include grounds for refusal. Also check out: refusal Dutch business permit.

Ground for refusal concerning the applicant’s status

Requirements may also be imposed on the (status of) the applicant. For example, the applicant must be at least 21 years of age and the applicant (operator of a catering establishment) must be of good behaviour as stipulated in Article 8 of the Drink and Catering Act. This is usually also regulated by the General Municipal Bye-Law. There will be no question of good behaviour if the applicant has recently been convicted of a violent crime. There are no restrictions on the facts or circumstances that may be involved in the assessment of living behaviour (Council of State, 31 October 2011, ECLI:NL:RVS:2007:BB6825).

Negative probity screening as a ground for refusal or withdrawal

In addition, a Bibob review (integrity or probity test) takes place. Bibob stands for the Act on the Promotion of Integrity Assessments by Public Administration. The Bibob Act stipulates, among other things, that the government may refuse or revoke licences, subsidies, tenders and real estate transactions if there is a risk that criminals will abuse a licence. In doing so, the integrity of the applicant is investigated. An assessment must be made as to whether there is a serious risk that the licence will (also) be used to commit criminal offences or whether there is a serious risk that the applicant will commit criminal offences with the benefits obtained from the licence. This is done when applying for a licence for real estate, subsidy, (large) events such as martial arts galas, an operating licence for a hotel and catering company, and for games of chance such as in a gaming hall. Testing under the Bibob Act is also possible if there are signs that the applicant or his business circle can be associated with criminal offences.

Refusal/withdrawal and principles of good administration

Even in the event of a decision to refuse a licence, the administrative body must comply with the principles of good administration discussed below. The principle of due care laid down in Article 3:2 of the General Administrative Law Act means that, when preparing a decision, the administrative body must have the requisite knowledge of the relevant facts and interests to be weighed up. Pursuant to the principle of proportionality (Article 3:4 AWB), the government body must weigh up the interests directly involved in the decision in so far as no restriction arises from a statutory provision or from the nature of the power to be exercised. The adverse effects of a decision on one or more interested parties must not be disproportionate to the aims to be served by the decision.

Judge’s review of refusal/revocation of Dutch permit

A decision by an administrative body to refuse or revoke a licence will usually be subject to careful judicial review. The judge is not allowed to sit in the chair of the administration. The judge assesses the legitimacy of the decision, checking whether the interests at stake have been carefully weighed up and whether the board has used their authority reasonably. In doing so, the court also examines whether the decision is disproportionate and whether there are special circumstances that should have been taken into account in deviating from the policy (inherent power of deviation under Section 4:84 of the General Administrative Law Act).

Dutch Court may test regulation that lead to refusal/revocation of license

This means that an applicant who appeals against a refusal or withdrawal can also raise the (lawfulness of the) regulations on which the decision is based in the proceedings. Regulations or rules may be disregarded on the ground that they are contrary to a general principle of law. The judge therefore always looks at the reasonableness of the decision making by the public authority. In proceedings, a lawyer will make clear which facts and circumstances have not been given enough weight by the administrative body and that these facts and circumstances should have led to a different judgement. It is up to the administrative authority to weigh the various interests, facts and circumstances involved in making a decision, which are generally binding rules (Council of State, 23 November 2016, ECLI:NL:RVS:2016:3130).

More on this and other topics on Dutch business licences you can read in my book “Business licences in the Netherlands“.