Everyone is obliged to provide information to the Tax and Customs Administration when asked to do so.
Duty to inform
This obligation to provide information relates to data and details that are relevant to the taxation of the taxpayer themselves. Books, records and other data carriers, or their contents, must be made available in this context.
Only those subject to the reporting obligation (see below) are also required to provide information relevant to the collection of taxes from others.
Retention obligation
Taxpayers subject to record-keeping obligations must keep records. These records must be retained for at least 7 years (information relating to VAT and property must be retained for at least 10 years).
The following are subject to record-keeping requirements:
- legal entities (such as NVs and BVs);
- natural persons who run a business or practise a self-employed profession, who are required to deduct tax at source (for payroll tax) or who carry out work.
The duty to provide information does not lapse
The Supreme Court has recently ruled that the duty to provide information does not lapse, even after the expiry of the period to which the retention obligation applies. As a result, a person subject to record-keeping obligations is required to provide information to the Tax and Customs Administration, even if the records – which are more than seven years old – have been destroyed.
Insofar as taxpayers may rely on the Administrative Tax Law Decree to assume that the basic data in their records will no longer be requested once the seven-year retention period has expired, the Supreme Court has ruled that this applies only to certain parts of the records (ledger, accounts receivable and accounts payable, payroll records and stock records).
Good governance
Of course, the obligation to provide information cannot be unlimited either. It is conceivable that information and data may date so far back that the Tax and Customs Administration’s request for them would be contrary to the general principles of good governance. However, the specific circumstances of each case must be assessed in this regard.
The case decided by the Supreme Court concerned taxpayers who had admitted to having held an account with KB Lux. However, the details of that account could no longer be retrieved because the account had been closed in the early 1990s. Nevertheless, the Supreme Court upheld the Court of Appeal’s ruling that requesting details of this bank account did not contravene the principles of good governance. The Court of Appeal held that taxpayers could reasonably be expected to make a substantial effort to obtain the information.
The penalty imposed on taxpayers is no small matter: €5,000 per day, up to a maximum of €150,000.