Tax in the Netherlands part 4

This is the fourth piece in our Tax in the Netherlands series. In this edition we will discuss requests for an extension for filing the tax return and the consequences thereof, and the penalties for the late submission of returns.

Extension for filing of tax return
The deadline for submission of income tax returns has lapsed. The deadline for this was April 1st. If you  have received a tax return form it is recommended that you do your tax return as soon as possible. If you do not do this in time the tax authorities may impose fines (see below for further information).

As a tax service provider we can implement a special arrangement we have with the tax authorities. This arrangement allows us to request deferral of tax returns for our clients. This gives us the extra breathing space to submit all tax returns of our clients by May 1, 2012.
This arrangement is not without obligation. We must submit a certain percentage of our clients’ tax returns every month. If we fail to meet this obligation then the whole deferral scheme will be repealed for all of our clients.
For new clients we can also request the income tax return deferral after April 1, 2012 provided that no reminders to submit the tax return have been sent.

Consequences of the deferral scheme
The tax office has up to 3 years to make their final assessment. If you are granted the filing extension, this period is extended by the extension period. Note that the entire extension period is taken into account, not only the period of deferral  ultimately  used. Practically, this means that the time period for the imposition of a final assessment is extended by one year.
The deadline for benefit and/or allowance applications is also extended. If no deferral is granted to you then the request for a benefit/allowance must be submitted before April1 of the year following the year which you are applying for the allowance/benefit for. (A request for an allowance over the 2011 year must be submitted by April 1, 2012).

Penalties for late filing or failure to file income tax returns
The Dutch income tax return 2011 must be filed with the Dutch tax authorities before  April 1st  of  2012.

If you submit your tax return too late (or not at all) you may receive a substantial fine, the default penalty.
Since January 1st,  2009, the fining policy of the Dutch tax authorities has been severely tightened and the penalty increased. The frequency of breaches also affects the severity of the penalty.

– For the first (single) late submission of the income tax return, the default penalty amounts to € 226;
– For the second late submission of the income tax return the default penalty amounts to € 984, and
– By systematic late submission of income tax returns the default penalty amounts to € 4.920.

If the deadline for filing the income tax return has lapsed and you have failed to comply, the Dutch tax authorities will send you a reminder. In this reminder you receive a window of ten working days in which to submit the return.
If you again fail to comply within the timeframe the fine will start to accumulate within seven days.

The Dutch tax authorities also impose default penalties for making false declarations and for not applying  the necessary correction. In both cases the fine is € 1200.

In the next article we will discuss the 30% ruling – what happens when this lapses and how to deregister for it – and self-employment.