How to avoid tax fines in the Netherlands
It's tax time again, and the Dutch tax authorities have started sending out invitations for the filing of the annual income tax returns.
A tax is a fine for doing something right.”
It is important that you file your tax return in time. The standard deadline for filing a tax return is 1 April if you have lived in the Netherlands for the whole tax year and 1 July if you haven't resided in the Netherlands the full 12 months. The tax authorities must always give you at least one month to prepare and file the tax return and will round this off upwards to the first day of the following month. So if you receive an invitation to file a tax return dated 15 May, the deadline will be 1 July.
It is possible that you don't receive an invitation, and in that case there is no deadline. But if you know that you have to file a tax return because you have to pay additional income tax and didn't receive an invitation before 1 July, then you will have to request an invitation before 15 July.
Requesting an extension for your tax return
If for whatever reason you won't be able to file the tax return before the deadline, you can request a time extension from the tax authorities. The tax authorities will then extend the deadline till 1 September. When you ask for an extension you don't have to provide a reason. If you use the help of a registered tax advisor, a time extension can be arranged by your advisor under their time extension ruling with the tax authorities. Under this ruling, the time extension can be until 1 May the following year.
If you don't submit your tax return
If the tax return is not filed before the deadline, the tax authorities will send a notice that you didn't file yet. This is not as yet an 'official' warning, but shouldn't be ignored. If the tax return is still not filed, the tax authorities will send a formal reminder, giving you another 10 working days to file the tax return. If the tax return is not filed within these 10 working days, a fine will be imposed.
Once a reminder is received it is no longer possible to arrange a time extension. Be aware that even if you file before the 10 working days are up, you officially still filed late. Although you will not receive a fine, the late filing can have consequences for a future request for a time extension. Over the past couple of years, the tax authorities have been sending reminders closer to the filing deadline.
While the tax authorities will act faster and look more specifically at the filing date, note also that the fines for late or no filing have gone up since 2009. This has led to a lot of discussion. And not without reason, the fines were raised with more than 400 percent!
What kind of fines are we talking about?
Fine for late filing of a personal income tax return
The standard fine for filing late is EUR 226. Filing late for the second time will lead to a fine of EUR 984 (20 percent of the maximum) and for the third time the fine will go up to a maximum of EUR 4,920.
Fine for late filing of a corporate income tax return
The standard fine for filing late is EUR 2,460 (50 percent of the maximum). If a tax return is filed late repeatedly the fine will go up to a maximum of EUR 4,920. For corporate income tax returns the standard deadline is 1 June.
Fines for other omissions
Besides fines for filing late, there are also fines for providing wrong or incomplete information in the tax return. This fine can go up to 100 percent of the tax you omitted to pay due to the error(s) in the declaration. The percentage depends on the reason why the mistake was made. Was it a real mistake or was it fraud? If it concerns a real mistake the fine is normally 0 percent. But if the tax authorities can prove that the mistake was made on purpose the fine can be 25 percent, 50 percent or even 100 percent.
Some other examples of possible fines are:
- Not declaring savings and investments: 100 percent or even 300 percent of the tax you omitted to pay due to the error(s) in the declaration.
- Wrong kilometre registration for a company car: up to EUR 4,920.
- Providing the requested information for a tax allowance too late or not at all (for example child care): up to EUR 4,920.
- If the wrong information has been provided to the tax authorities on purpose to claim a high tax allowance, the maximum fine will be 100 percent of the amount which has to be paid back to the tax authorities without an absolute maximum.
It is always possible to contend a fine which is issued by the tax authorities. This must be done within six weeks after the date of the tax assessment stating the fine. The tax authorities will have to explain why they have given a fine. In the objection, certain reasons can be given as to why the fine is too high. A list of possible reasons is available. However, it is better to prevent the fine than having to raise an objection.
So make sure that you file your tax return before the deadline. Request a time extension if you can't meet the deadline. If you are not sure what to do, contact a tax advisor who can assist you with everything.
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