Voluntary disclosure regulation eased until the 1st of July 2014
Eased Voluntary disclosure regulation
Tax evaders can use the eased voluntary tax regulation until the 1st of July 2014. Those who reports themselves in time at the tax authorities do not need to pay a fine.
Punitive fine
Those obligated to pay taxes that deliberately filed an incomplete or incorrect tax return, which causes tax liability that is too low, can be penalized with a punitive fine. This punitive fine can, at most, be 100% of the owed tax. However, when it is a matter of owed taxes regarding the capital of box 3, then the punitive fine can, at most, be 300% of the owed taxes.
Current voluntary disclosure regulations
Because the punitive fines can become very high, the Dutch legislator has set up a regulation so those obligated to pay taxes are stimulated to voluntarily report themselves to the tax authorities: the voluntary disclosure regulation. This regulation divides the possibility to disclosure in two situations. The first situation concerns the one obligated to pay taxes that has voluntarily reported himself within two years after an incomplete or incorrect tax return has been filed. The second situation concerns the one obligated to pay taxes who has reported himself after the two years have expired.
Disclosure within two years
The voluntary disclosure regulations concerns the situation in which people can file a correct or complete tax return after an incomplete or incorrect tax return has been filed within two years. The voluntary disclosure regulation dictates that those who voluntarily report their incorrect or incomplete tax return do not have pay a punitive fine. Because of this regulation everybody that makes a voluntary improvement of their tax return is excluded from a possible punitive fine.
Disclosure after two years
When someone obligated to pay taxes reports himself voluntarily after the two year term at the tax authority for the improvement of his tax return, the tax payer is entitled to a mitigation of the punitive fine. The punitive fine will only amount to 30% of the evaded taxes.
Temporarily extended voluntary disclosure regulation
The period for additional claims in the case of bad-faith is extended from 5 years to 12 years. With this extension the current distinction in the period for additional claims for domestic and foreign situations is removed. This is one of the actions that the Dutch legislator has taken in the battle against tax evasion. In relation to the direct implementation of these actions, it has been decided that those obligated to pay taxes acting in bad faith, as a transitional measurement, are met by this extended voluntary disclosure regulation.
Disclosure within two years
The disclosure within two years after filing an incomplete or incorrect tax return had been exempted until the 1st of July 2014.
Disclosure after two years
This concerns the situations where the person obligated to pay taxes two years after filing an incomplete or incorrect tax return eventually voluntarily discloses this information. The easing of the voluntary disclosure regulation means that the punitive fine that is usually lowered to 30% of the evaded taxes, is lowered to nought.
The extension of the voluntary disclosure regulation is only temporary. The easing applied until the 1st of July 2014. Everyone obligated to pay taxes that had voluntarily disclosed their incomplete or incorrect tax return will not have been penalised with a punitive fine. From the 1st of July 2014 until the 1st of July 2015 the current voluntary disclosure regulation will have been reinstated.
Success of the easement
We can now say that the easing of the voluntary disclosure regulation has been a success. At the end of 2013 over 1.200 tax evaders, with an average capital of €433.000, have reported themselves at the tax authorities. Over 11.000 people have reported themselves since 2009, with in total almost €4 billion in held back capital. This has structurally supplied the Dutch government of €48 million a year.
Tightening the voluntary disclosure regulation
State secretary of Finance Weekers wants to tighten the voluntary disclosure regulation in order to say goodbye to the granted lenience for those obligated to pay taxes acting in bad faith. The current voluntary disclosure regulation will be tightened after the easement, starting at the 1st of July 2015
Voluntary disclosure regulation within two years
If the term of two years has not yet expired, in line with the easement of the voluntary disclosure regulation, no punitive fine will be implemented until the 1st of July 2014.
Voluntary disclosure regulation after two years
After the 1st of July 2015, the voluntary disclosure regulation of someone obligated to pay taxes after two years after the finable fact, will lead to a temperance of the punitive fine to 60% of the evaded taxes. The eased voluntary disclosure regulation until the 1st of July 2014, the punitive fine will be 30% of the evaded taxes.
Those who want to disclose information regarding their tax return will benefit from doing this before the 1st of July 2015, after this deadline the punitive fine will be 60% of the evaded taxes. If you do not use the voluntary disclosure regulation, the punitive fine will amount up to 100% of the evaded taxes and with regard to the evasion of taxes in box 3 this can amount a punitive fine of a maximum of 400%.
Parool, Monday 11th of November 2013.
Ruling of the state secretary of Finance, nr. BLKB2013/509M, 2nd of September 2013