Interest calculation for mirroring corrections to VAT and VAT Compensation Fund | Deloitte Netherlands

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Interest calculation for mirroring corrections to VAT and VAT Compensation Fund

According to the Supreme Court, legislative history indicates that the legislature deliberately accepted the calculation of interest for mirroring corrections in VAT and the VAT Compensation Fund not being neutral. Therefore, there is no reason for interest mitigation.

14 November 2023

Interest on self-assessment taxes

On imposition of an additional VAT assessment, interest on tax is charged from the day after the end of the year to which the tax liability relates until the date on which that additional tax assessment becomes collectible. Conversely, interest on tax will be paid if the Tax Inspector fails to determine a refund in response to a request within an eight-week period. The interest on tax scheme has been declared applicable mutatis mutandis to the VAT Compensation Fund (VCF) (btw-compensatiefonds, BCF), albeit that the period for which interest is calculated or reimbursed does not start until six months after the end of the contribution year.

Mirroring corrections

In June 2023, two cases focused on the question what the consequences for the interest calculation are if an additional VAT assessment is offset by a (supplementary) contribution from the VCF, or vice versa. The interested parties argued that the interest calculation should be neutral, so that interest on tax should only be charged on the net amount to be paid. They also argued that interest calculation should be omitted for corrections of equal amounts (‘mirroring corrections’). But the Supreme Court, following AG Wattel, did not go along with this. Although it was noted when the VCF was introduced that related corrections should be treated equally from an interest perspective, the Supreme Court held that it cannot be deduced from this passage that in all cases involving an additional tax assessment, interest should only be calculated on the additionally assessed balance of VAT and VCF. Finally, the Supreme Court observed that the VCF does not serve to fulfil an obligation under EU law, so that the general principles of EU law cannot be invoked either.

Interest on tax policy

The reliance on a policy adopted by the Tax Administration was also rejected. This policy meant that no interest on tax was charged for a period in which the Tax Administration already had the tax amount at their disposal. However, the Supreme Court pointed out that the right to a contribution from the VCF only arises after the Tax Inspector has established it in a decision open to appeal. Therefore, it cannot be said that the amount of VAT additionally assessed had actually already been paid in the form of an underpayment of the contribution from the VCF.

Discretionary power to impose a reduction

Since 1 January 2023, though, the Tax Inspector also has discretionary power to reduce interest on tax charged to the extent that the tax due has already been levied. A ministerial regulation may designate situations in which the tax due is deemed to have been levied. An internet consultation published in August 2023 shows that the regulator indeed intends to include the mirroring corrections as referred to above in the scope of the regulation from 1 January 2024. To the extent that the taxpayer demonstrates that an additional VAT assessment is matched by a contribution from the VCF, or vice versa, they can file a request to reduce the interest on tax charged. This will probably only apply in cases in which the taxation has not been irrevocably determined as from 1 January 2024.


Source: HR 9 June 2023, ECLI:NL:HR:2023:875, 888 and 890

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