Bill on Taxation (Miscellaneous Provisions) Act 2023 submitted to House of Representatives | Deloitte Netherlands


Bill on Taxation (Miscellaneous Provisions) Act 2023 submitted to House of Representatives

The Taxation (Miscellaneous Provisions) Act 2023 includes technical and substantive changes. The Tax Inspector may, e.g., reduce interest on tax insofar as tax was already levied in the interest period. However, the payment discount on provisional corporate income tax assessments will be abolished.

15 June 2022

At the end of May 2022, the State Secretary for Finance submitted the Bill on the Taxation (Miscellaneous Provisions) Act 2023 (Fiscale Verzamelwet 2023) to the House of Representatives. In addition to technical amendments, this bill also contains a number of interesting substantive proposals. We have included a brief summary below.

Corporate Income Tax Payment Discount

It had already been announced that payment discounts on provisional corporate income tax assessments that are collectible in more than one instalment will be abolished. This will take effect on 1 January 2023 and involves, in short, provisional assessments imposed during a taxpayer's current financial year. At the time, the reduction was introduced to reduce the administrative burden, but nowadays payment by instalments are administratively less burdensome. Nevertheless, the abolition is mainly for budgetary reasons. Taxpayers receiving a provisional personal income tax assessment that can be paid in instalments can continue to use the payment discount.

Dividend withholding tax

Capital contributions as referred to in Article 10(1)(c) of the 1969 Corporate Income Tax Act will be added to the basis on which dividend withholding tax is due. In addition, the scope of the anti-dividend stripping rule (Art. 4(7) Dividend Withholding Tax Act 1965) is clarified by replacing the term ‘legal entity’ (rechtspersoon) with the term ‘entity’ (lichaam). This is to prevent transparent entities without legal personality from remaining outside the scope of this provision. In addition, after the date of entry into force, legal entities other than Dutch public limited companies (nv’s) and private limited companies (bv’s) - such as holding cooperatives - can also have the paid-up capital determined by the Tax Inspector by means of a decision open to objection (Article 13 of the Dividend Withholding Tax Act 1965).

Customisation of interest on tax

An evaluation of the interest on tax scheme conducted in 2018 still showed that the government did not intend to change the system of charging interest on tax on - review of - provisional assessments. According to the State Secretary for Finance, the scheme reflects the notion of default. Moreover, changing the rules would have major implementation consequences for the Tax Administration. Various court rulings in which interest on tax charged was reduced pursuant to the principles of proper administration were also unable to persuade the government to change its mind.

However, a change of course has now taken place. The Taxation (Miscellaneous Provisions) Act 2023 includes a provision that gives the Tax Inspector the statutory power to proportionally reduce any interest on tax charged, insofar as it appears that the tax due during the interest period has already been levied, or has been self-assessed. Examples mentioned are the reduction of a provisional assessment followed by a higher - provisional - assessment and recovery of incorrect loss carry-back. By ministerial regulation, cases can be designated in which the tax is deemed to have been levied. The explanatory memorandum cites as an example the situation where the imposition of an income tax assessment on a taxpayer is directly related to the reduction of an assessment of the tax partner. In such a case, there are ‘communicating vessels’. However, the scheme is not intended to reduce interest on tax that relates to the payment period of a tax assessment.

Although the explanatory memorandum to the Bill states that the Tax Inspector will, where possible, reduce taxes on their own initiative, the State Secretary admits that this will often require a request from the taxpayer. An explicit appeal is made to the ‘ability to do’ of taxpayers. If the House of Representatives and the Senate approve the Bill, the scheme will apply to all tax assessments not yet irrevocably determined when the Act enters into force. Due to implementation difficulties, an exception applies to wage tax and turnover tax. These taxes will be added at a later stage.

In addition, the period over which interest on tax is charged will be limited to ten weeks in the event that an additional assessment is issued in accordance with a request by the taxpayer. Again, an exception applies for the time being, but only to turnover tax.

Improving legal protection

As of 1 January 2023, all decisions open to objection that are included in an assessment notice will be considered part of that tax assessment for the application of the statutory provisions on objections and appeals. Hence, a notice of objection to an assessment will automatically also be deemed to be an objection to the decisions open to objection that are included in the assessment notice (interest on tax, penalties, loss assessment, etc.) and vice versa. This change in legislation only applies to state taxes and not to any other taxes to which the rules of the State Taxes Act (AWR) have been declared applicable mutatis mutandis.

In addition, the rejection of a request to enter into a mutual agreement procedure with a treaty partner must from now on be laid down in a decision open to objection. This concerns situations where double taxation threatens to occur, or where taxation is otherwise in violation of the treaty. The purpose of the change is to transfer the legal protection against such a decision to the tax court.

Exemption facility for cases of hardship

The Collection of State Taxes Act 1990 provides that interest-free deferral of payment may be granted for a period of at least five years to individuals for whom the payment of a tax debt within the regular payment period would be extremely unfair. The criteria for application of this deferral facility will be detailed in a ministerial regulation.

Source: Parliamentary Documents II 2021-2022, 36 107, no. 2 (legislative bill) and no. 3 (explanatory memorandum)

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