Outline of procedural tax law, collection and allowances
2019 Tax Plan - Budget Day (Prinsjesdag)
The following lists the measures proposed in the 2019 Tax Plan in respect of procedural tax law, collection and allowances.
20 September 2018
Recourse structures for collection purposes
Tax collection measures were announced as early as the start of 2017. The then State Secretary stated that the Tax Administration came across numerous structures to avoid paying taxes. The structures are both complex - often international - structures and simple structures. One such structure involves donating all assets to avoid paying taxes. On the back of this a set of four amendments to the Collection of State Taxes Act has now been announced to tackle these so called recourse structures.
Liability of beneficiaries
According to the State Secretary, one of the ways in which tax debtors try to avoid paying taxes is to dispose of their assets right before the Tax Administration has been able to safeguard the recourse possibilities for the collection of taxes. Examples are donations to family members and legal entities making liquidation payments to shareholders. The regulation proposed will enable the Tax Administration to hold beneficiaries of these payments liable if they knew or should have known this could harm the Tax Administration.
Extension recourse possibilities involving heirs
Right now, under civil law heirs can already be held liable for debts of the testator. Such liability is limited in respect of tax debts – the goal is to protect heirs. The State Secretary, though, feels this protection also offers undesirable possibilities to avoid paying taxes. This is why he proposes to extend the liability of heirs to include the amount of donations an heir has received from the testator within 180 days prior to the testator’s death.
Alternative notification of assessment
Certain periods, such as the objection period and the term of payment, will not start until after the tax assessment has been announced in the prescribed manner. If legal entities no longer exist it is not possible to simply issue a notification of assessment, though. Usually this requires court intervention, while abroad this is sometimes not even possible at all. This frustrates or slows down the collection of tax debts. Hence the alternative and simpler manner the legislature now proposes for the notification of assessment in respect of legal entities that no longer exist.
Extension of information obligation
The State Secretary notes the observation by Tax Administration about the existing information requirements sometimes providing insufficient information to adequately substantiate a notification of liability. One situation where this occurs is when assets are being diverted through foreign legal entities, with which the identity of the beneficiary is opaque. The insight into these structures needs to be improved, so potentially liable persons will have the obligation to provide the Tax Administration with information, if requested, for the collection of taxes.
Interest on tax scheme for income tax and inheritance tax
The only way in which taxpayers who find themselves in a payment position can avoid interest calculation is if they have filed a tax return before the first day of the fourth month after year end. Since 2014, however, the ultimate filing date for personal income tax returns has been moved to 1 May after the calendar year. The government now proposes to also use this date for the interest on tax scheme. A similar adjustment is proposed for inheritance tax assessments. From now on here, too, no interest on tax will basically be charged if a tax return is filed on time and the assessment is determined in accordance with that tax return.