Changes announced in the decision requiring information
The decision requiring information was evaluated in late 2016. The State Secretary for Finance has now announced measures aimed at limiting the term of proceedings against this decision.
19 September 2018
Decision requiring information
Since 1 July 2011, inspectors have the possibility to take a decision open to objection, determining that an individual/legal entity has failed to meet the disclosure obligation or the requirement to keep records. Inspectors should specify in detail which taxes and periods are involved, what information is still missing, and why this could be important for tax purposes. They also state a period within which the requested information can still be provided, and they point out the potential consequences (reversal of and heavier burden of proof) if the party involved persists in refusing to provide the information requested.
Over the past few years, quite a few gaps have been revealed in the statutory provision of the decision requiring information. The uncertainties included the effect of the provision on pending proceedings, whether the decision requiring information could also be taken in the objection phase, and whether a reversal of and heavier burden of proof are a given once the decision has become irrevocable. The Supreme Court was swamped with cases involving these issues over the past few years.
The decision requiring information has now become the subject of political scrutiny as well. An evaluation report offered to the House of Representatives on 30 November 2016, indeed shows reinforced legal protection in terms of the obligation to provide information. The Tax Administration now deals with requests for information more consciously. As far as the requirement to keep records is concerned, the researchers are less convinced of the usefulness and necessity of the decision requiring information. It is often impossible to repair any administrative errors afterwards. Separate proceeding to determine this would thus seem to be of little use. The long processing time of the proceedings is considered to be a major problem as well.
On the back of the evaluation report, the State Secretary for Finance presented a few problem solving approaches recently. Firstly, he contemplates on restricting the proceeding against the decision requiring information to a single court deciding on questions of fact, followed by an appeal with the Supreme Court. What’s more, the proceedings should solely focus on the question whether a taxpayer has met the information requirements. The only moment when a judgment on the consequences of a possible violation should still be discussed is in proceedings against a tax assessment.
Secondly, the State Secretary proposes to no longer have the requirement to keep records fall within the scope of the statutory provision. As a result, an inspector will no longer need to determine an alleged violation of this obligation upon a decision requiring information. The consequences to be linked to non-compliance can then directly be discussed in the proceedings against the tax assessment.
A person who has an obligation to keep records and who believes the inspector has wrongfully imposed certain obligations, can request for a reimbursement of costs. Although this instrument has not been used in practice so far, the State Secretary nevertheless thinks the possibility of such a reimbursement should be retained. Another possibility to be retained is the possibility to initiate civil proceedings, in addition to a decision requiring information. Such proceedings can lead to taxpayers being ordered to comply with their disclosure obligations, subject to a penalty payment.
The State Secretary has submitted the aforementioned problem-solving approaches with the Council for the Judiciary for advice. A bill will subsequently be presented for consultation.
Source: Letter State Secretary for Finance of 30 August 2018, no. 2018-0000145648