Outline of procedural tax law and collection of taxes

Outline of procedural tax law and collection of taxes

Back to outline Tax Plan

Dutch version

Right to inspect tax files

Taxpayers will have a statutory right to inspect their own tax files. To this end, an exception to the statutory duty of confidentiality is created. An order in council may lay down rules on how inspection is granted and the grounds for refusing inspection. The Tax Inspector will decide on a request for inspection through a decision that is open to appeal. This allows any related disputes to be brought before the Tax Court. The measure will enter into force on 31 December 2025 at the latest.

Revision of income tax returns

The legislator codifies the Tax Administration’s current working method, according to which a filed (possibly revised) income tax return is regarded as a request for ex officio reduction after the final assessment has been determined, even if the six-week objection period has not yet expired. This applies unless the taxpayer explicitly expresses their intention to object. This codification likewise applies to other decisions that are open to objection which are listed on the notice of assessment, such as charged interest on underpaid tax. To ensure legal protection, a tax return filed within the objection period cancels the regular restrictions applicable to a request for an ex officio reduction.

Limitation of compensation of costs of WOZ and BPM legal proceedings

The government wants to reduce the compensation amount for costs of professional assistance provided by a third party in BPM and WOZ legal proceedings, as this apparently involves excessive compensation. This compensation amount will be fixed at a flat rate based on procedural acts performed (expressed in points) multiplied by a fixed value per point. Finally, a weighting factor is applied to this. The government wants to limit the latter factor for WOZ and BPM legal proceedings by law, to 0.25 in the objection phase. The same factor will apply in the appeal phase if the decision is found in favour of the interested party, while it is 0.10 otherwise. Immaterial damage for exceeding the reasonable decision period in BPM and WOZ legal proceedings will be limited to EUR 50 per six months of delay. Only in the event of special circumstances will these limitations not apply. Finally, rules will be introduced to prevent the aforementioned compensations for cost of legal proceedings from being alienated or pledged, while they may only be paid into a bank account in the name of the interested party. The legislator introduces these measures to remove the financial incentive for representatives who operate on a ‘no cure no pay’ basis to initiate legal proceedings. Likewise, the legislator wants to reduce the burden for the judiciary. An amendment has extended the scope of the law to include proceedings against administrative penalties imposed under the Traffic Regulations (Administrative Enforcement) Act (Wet administratiefrechtelijke handhaving verkeersvoorschriften, or ‘Wahv cases’).

Administrative fines customs

Under the General Customs Act, anyone who files an incorrect or incomplete declaration is always liable to criminal prosecution, even in cases where the declaration does not include a deliberate error. This extends to the period within which a customs debt can be notified. If it involves a criminally prosecutable act this is five years. The bill ensures that an incorrect or incomplete customs declaration that does not involve intent, no longer results in a criminal penalty but in an administrative fine. As a result, the additional tax assessment period for a customs debt arising in those cases will be three years. Anyone who disagrees with an administrative fine can file an objection with the Customs Administration. Previously, this objection to the penalty order had to be filed with the Public Prosecutor’s Office. Although the bill does lead to faster and more effective imposition of administrative fines, settlements will be handled quicker as well. By reducing the additional tax assessment period, fewer import duties will be reclaimed. The shift from criminal provisions to administrative fines is expected to result in the collection of a higher amount of administrative fines.

Late filing/assessment interest

In a separate letter to the House of Representatives, the State Secretary announced that the late filing/assessment interest rate for corporate income and withholding tax purposes and the solidarity contribution will be based on the ECB interest rate + 5.5%, with a minimum of 5.5%, effective from 1 January 2024. Currently, this would mean an interest rate of 10%. For other taxes, the ECB rate + 3% will apply, with a minimum of 4.5%. At the current interest rates this would mean an interest rate of 7.5%. An interest rate of 4% will apply for allowances. Interest on overdue tax will also be set at 4%.

Hardship clause in Collection of State Taxes Act 1990

If a specific set of facts arises where a tax act has consequences (that the legislator did not foresee or intend), a request can be made to apply the hardship clause. Successfully invoking the hardship clause may lead to derogation from the statutory provision. Only in exceptional situations involving unfair consequences based on the application of the statutory provision(s) can the hardship clause provide a solution. To also be able to offer more customisation in implementing the Collection of State Taxes Act, the government proposes to add a hardship clause to this Act. The hardship clause should only apply to the Collection of State Taxes Act and not extend to provisions in other acts that declare specific provisions of the Collection of State Taxes Act to apply mutatis mutandis. Finally, it is proposed to have the application of the proposed hardship clause be subject to a similar procedure as has been in place for much longer for the existing hardship clause in the AWR.