Most people who pay or receive a refund of income tax receive an invitation from the tax authorities each year to file their tax return.
Invitation
That sounds friendly: an invitation. But it is indeed an invitation that you must not ignore. If the tax authorities have invited you to file a tax return, you MUST file a tax return. What’s more, you must also clearly, firmly and without reservation. Naturally, the tax return must be submitted before the deadline set by the tax authorities.
It gets even more complicated: if you owe income tax and the Tax and Customs Administration does not send you an invitation to file a tax return, you must request one yourself. You must do this within 6 months of the tax liability arising. If you fail to do so, the tax authorities may impose an administrative fine of € 2.639.
Sanction
If, having been invited to do so, you fail to submit your tax return to the Tax and Customs Administration, you may face the following penalties:
- an administrative fine;
- reversal and shifting of the burden of proof.
The fine for failing to submit your income tax return is € 369 (but this can rise to €5,278 if you fail to file more frequently). The Tax and Customs Administration may impose this fine for each tax return. For example, tax partners will each be fined separately.
For corporation tax, the penalty is considerably higher: € 2.639.
This penalty can only be imposed after you have been given a written reminder to submit your tax return. In the reminder, the Tax and Customs Administration gives you a (short) period of time in which to submit your tax return. Previously, the Tax and Customs Administration would send a reminder prior to the formal notice. You no longer receive this.
Reversal of the burden of proof means that it is not up to the tax authorities to prove how much your taxable income is. Instead, the tax authorities make a reasonable estimate of this based on the information in their records.
A higher burden of proof means that, if the estimated income is too high, you, as the taxpayer, must provide convincing evidence to that effect.
Electronic
For a number of years now, you have been able to file your income tax return electronically. Up to and including 2014, this was done by downloading the tax return software. Since 2015, it has been done via your personal account on the Tax and Customs Administration’s website.
Does downloading the tax return software constitute a request to the Tax and Customs Administration to be invited to file a tax return? The Gelderland District Court recently found that this was indeed the case. The court ruled that, as a consequence of downloading the tax return software, the return had to be submitted clearly, unequivocally and without reservation. This had not been done. The court therefore reversed the burden of proof.
A few months before this ruling, the Court of Appeal at ‘s-Hertogenbosch different. In that case, the tax authorities had to go to great lengths to substantiate their adjustments.
In the case before the Gelderland District Court, it was established that the taxpayer had in fact downloaded the tax return software. He had, in fact, submitted the tax return, but had not included his criminally obtained income in it.
If you downloaded the tax return software purely out of curiosity but did not submit a tax return, it would be rather odd for you to be fined. Nor could the Tax and Customs Administration (easily) determine who had downloaded the tax return software. In the current ‘personal domain’, this is, in all likelihood, a great deal easier. Is viewing the tax return in your personal domain regarded as a request for an invitation to file a tax return? The courts will probably have to rule on this at some point in the near future.