In 2018, the Tax and Customs Administration issued gift tax assessments for acquisitions made between 2007 and 2010 inclusive. The Court of Appeal in The Hague ruled that these assessments had been issued in good time.
Assessment periods
Under gift tax legislation, there are lengthy statutory time limits within which the tax authorities are permitted to issue tax assessments. This is because the tax authorities are often unable to establish that gifts have been made.
The general rule is that a tax assessment must be issued within three years of the end of the year in which the taxable event took place. This three-year period is extended by any extension granted by the Tax and Customs Administration for the submission of the tax return.
For gift tax purposes, the taxable event is the gift itself. However, the three-year period does not commence in the year in which the gift was made. It is calculated from the date of the donor’s death or the date on which the gift tax return was filed.
Court of Appeal of The Hague
The case The case before the Court of Appeal in The Hague concerns a person who died in 2006. As part of the settlement of his estate, his wife was granted a claim against their children. This claim was waived. No gift tax was paid on these gifts.
In 2016, the surviving spouse passed away. And in 2017, the Tax and Customs Administration discovered that no gift tax had been paid on the remissions in 2007, 2008, 2009 and 2010. On 20 February 2018, the tax authorities issue gift tax assessments for these years.
The Court confirms that these tax assessments were issued in good time. The three-year assessment period begins upon the death of the surviving spouse in 2016.
The beneficiaries have failed to fulfil their obligation to prove that they requested the issue of gift tax return forms, nor have they proved that they submitted such returns.
In view of this burden of proof, it is important to retain correspondence relating to donations for longer than the statutory retention period of five years that applies to private individuals.
Tax returns and exemptions
You can find more information on filing a gift tax return in our guidance note Gift tax return. Even if you make a claim under a Gift tax exemption, you often have to file a tax return.