“NAHEFFING for 5 to 6 million people”, is the headline that has appeared above several articles in the press. For a lawyer, it is toe-curling, because there is no question of an after-tax charge. That only comes into play with taxes like payroll tax and VAT. The articles are about income tax assessments that taxpayers may face in 2015 for the 2014 tax year. With income tax comes the cry of post-recovery, but there is no question of that either. The word NAHEFFING does attract attention and matches the perception of the tax layman.
What is going on? As in most years, politicians have crammed the discussion of the 2014 tax plans in 2013 into the period between Prinsjesdag (third Tuesday in September) and early November. Next, the Senate still has to bless the plans and then, just before Parliament's Christmas recess (mid-December), it will be clear exactly what changes will be implemented in taxation in the new year. Those changes must then be incorporated into the Tax Administration's computer systems and commercial providers' return software. Subsequently, both also have to be reconciled.
In recent years, this has proved increasingly problematic, especially on the part of the Tax Administration. So too in 2014, resulting in a number of the measures that came into force on 1 January 2014 not being processed in the provisional assessments and refunds received by taxpayers. The assessments to be imposed in 2015 in response to the 2014 tax returns still to be filed will, of course, reflect this, resulting in taxpayers receiving less tax back or having to pay additional tax. The amounts involved could be as much as €700.
It almost goes without saying that politicians are busy shoving this hot ball at each other. The Government accuses the House of amending the proposals with amendments at a late stage of the legislative process. The House bounces back that most of the amendments are really in the Government's proposals. But even in the context of the 2015 Tax Plan, the bill containing the measures for the 2015 tax year, everyone is again busy trying to drag in the amendment(s) that appeal to their constituents. Of course, the fragmented political landscape in the Netherlands is partly to blame. Of course it is in all our interests that the State receives sufficient tax revenues, even in these times of economic hardship. But an additional payment of €700 somewhere in early 2015 is still an extremely unpleasant surprise for many Dutch people.
Funny thing is that an amendment introduced on 28 January 2014 to the Implementation Regulation of the General Act on State Taxes 1994 stipulates that the Tax Administration does not have to adjust provisional assessments if they are incorrect due to legislative changes that have not yet been processed in the Tax Administration's computer systems. The condition is that the amount of the provisional assessment does not deviate significantly from the final tax due. Apparently, we should consider a deviation of €700 as “not material”. In our article published earlier this week “Provisional assessment and AB dividend” we wrote that the issue has been resolved for the rate step for substantial interest income. An interest of (at most) €15,000 is apparently substantial, although it took until mid-October for this little problem to be solved with a simple approval.