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Gift tax is what is known as a withholding tax. This involves the following procedure:
- The Tax and Customs Administration issues the taxpayer with a tax return form from;
- the taxpayer must submit the tax return, completed definitively and without reservation, to the Tax and Customs Administration;
- Following receipt of the tax return, the Tax and Customs Administration formalises the gift tax due in a (provisional) attack (which may differ from the tax return);
- the taxpayer pays the amount due as per the tax assessment[1].
Formal procedure
The Tax and Customs Administration may issue a tax return form of its own accord to anyone it suspects is liable for gift tax. The Tax and Customs Administration will then invite the person concerned to file a tax return. The taxpayer is, however, legally obliged to comply with that invitation[2].
If the Tax and Customs Administration does not issue a tax return form of its own accord, the taxpayer must request one[3]. After all, in many cases the tax authorities are unable to establish that a gift has been made.
A taxpayer who has not received the tax return form within two months of the end of the year in which the gift was made (i.e. before 1 March) must, within two weeks of the end of the aforementioned two-month period,[4] ask the Tax and Customs Administration to issue a tax return form.
Example
The gift was made on 1 February 2021. If the tax authorities have not issued a tax return by 28 February 2022, the taxpayer must have requested one by 14 March 2022 at the latest.
In practice: download a tax return form or file your tax return online
Incidentally, for the purposes of gift tax, it is not necessary to submit a formal request to the Tax and Customs Administration for the issue of a tax return form.
The tax return form can be downloaded as a fillable PDF file from the Tax and Customs Administration’s website (www.belastingdienst.nl), completed and sent to the Tax and Customs Administration on paper.
You can also complete a tax return online via MyTax Office (using DigiD).
The Tax and Customs Administration must have received the tax return in all cases by 1 March of the year following the year in which the gift was made (tax returns for gifts made in 2021 must be received by the Tax and Customs Administration by 28 February 2022 at the latest).
File your tax return earlier
You are, of course, permitted to submit your return earlier. In that case, the gift tax will also have to be paid earlier. Where there are multiple gifts in the same calendar year, you must take into account any gift tax returns that have already been submitted.
Beneficiary
The obligation to pay gift tax rests with the recipient of the gift (the donee). The donee is therefore also responsible for requesting a tax return form in good time, as well as for submitting that form in full and on time.
Schenker
The donor is also obliged to file a gift tax return[5]. If the donor has not received a tax return form, the donor must also ask the Tax and Customs Administration to issue one.
The basic principle is that gift tax is paid by the recipient. However, the gift tax may also be borne by the donor. In that case, the gift tax paid by the donor is, of course, an (additional) gift subject to gift tax (the gift tax must then be grossed up).
One tax return form
The beneficiary and the donor may file their gift tax return jointly on the same tax return form.
Gifts to multiple beneficiaries can be declared on the same tax return form. It is still possible, however, to opt for each beneficiary to receive their own gift tax assessment.
Taxable gift
A gift tax return does not need to be submitted (and, naturally, there is no need to request a tax return form) if:
- no gift tax is payable[6] and;
- no use has been made of any exemptions other than the standard ones.
There are two standard exemptions. For 2022, these amount to[7]:
- for gifts to children: € 5.677 (2021: € 6.604);
- for other donations: € 2.274 (2020: € 3.244).
All other exemptions must be explicitly claimed. As this claim must be made in the tax return, a tax return must still be submitted in such cases, even though no gift tax is payable[8].
Payment
The gift tax due must be paid within 8 weeks of the date of the tax assessment. This payment deadline is stated on the tax assessment notice.
Default penalty
Under the gift tax legislation, the following penalties for failure to comply may be imposed:
- due to failure to submit, or failure to submit in good time, a tax return form issued by the Tax and Customs Administration;
- due to a failure to request a tax return form, or to do so in good time.
Failure to pay, or late payment of, the gift tax due as stated in the tax assessment cannot, of course, result in a fine being imposed. After all, gift tax is a self-assessed tax, not a withholding tax. However, if payment is made after the due date, the Tax and Customs Administration will charge interest on arrears.[9].
Failure to submit a tax return (on time)
If the Tax and Customs Administration has issued a notice to file a tax return, this will state the date by which it must be submitted. If the Tax and Customs Administration does not receive the tax return by that date at the latest[10], a reminder will be issued, setting a (new) deadline for return[11]. If the tax return has not been submitted by the latter date either, the Tax and Customs Administration may impose a late filing penalty of € 386[12].
In exceptional cases (for example, in the event of systematic non-compliance), a higher fine may be imposed, up to the statutory maximum of € 5.514.
Failure to request the award (in good time)
Failure to request the issue of a tax return form, or to do so in good time, in cases where the law so requires, will result in a default penalty of € 2.757[13].
In exceptional cases (for example, in the event of systematic non-compliance), a higher fine may be imposed, up to the statutory maximum of €5,514[14].
Absence alone is sufficient
A key feature of a default penalty is that the extent to which the taxpayer can be held responsible for the breach is irrelevant. The mere fact that an obligation arising from the law has not been fulfilled, or has not been fulfilled in time, is sufficient to impose the default penalty. Only in the exceptional circumstances where there is no fault whatsoever must the Tax and Customs Administration refrain from imposing a late payment penalty.
Mitigating circumstances
The Tax and Customs Administration’s Decree on Administrative Fines provides for the possibility of requesting the Tax and Customs Administration to take mitigating circumstances into account when determining the penalty (the amount of the fine). Experience shows that the Tax and Customs Administration does not automatically take such circumstances into account (fines for failure to comply are often imposed automatically), but that a request must be made, for example by lodging an objection against the fine imposed.
VWG
Do you have any questions or comments regarding this memo? If so, please get in touch with us.
Of course, we’d be happy to take the hassle off your hands by handling the planning, documentation and processing of your gifts on your behalf. For any gifts you received in 2021, the gift tax return(s) must be submitted by 28 February 2022 at the latest.
The purpose of this note is to outline a scheme in broad terms. For the sake of clarity, matters have therefore been presented in a simplified manner.
VWG is therefore not liable for the consequences of any actions taken or not taken in response to this memorandum.
[1] Naturally, this applies only if the tax assessment is accepted. If not, an objection or appeal may be lodged (this procedure is not discussed in further detail in this note).
[2] Section 40 of the Inheritance Tax Act 1956 and Section 6 of the General Tax Act.
[3] Article 6(3) of the General Tax Act (AWR) in conjunction with Article 2(3) of the AWR Implementing Regulations.
[4] Article 6(3) of the General Tax Act (AWR), read in conjunction with Article 2(4) of the AWR Implementing Regulations.
[5] Section 6 of the AWR and Section 2 of the AWR Implementing Regulations.
[6] Article 2 The AWR Implementing Regulations apply in respect of a taxable donation.
[7] In 2021 alone, these amounts were increased by €1,000.
[8] Case law shows that an exemption can only be claimed by means of a tax return. With regard to other taxes, however, the Supreme Court has ruled that a claim under a scheme may be made up until the point at which the tax assessment becomes final.
[9] Due to the coronavirus crisis, the rate of interest on arrears will be just 0.01% until 1 July 2022.
[10] It is possible to apply for an extension to the deadline for submitting a gift tax return. In that case, the reminder may, of course, only be issued once the extension period has expired without the return having been submitted.
[11] §21(4) of the Tax and Customs Administration Administrative Fines Decree stipulates that a default fine may only be imposed if the deadline for submission specified in a reminder has not been met.
[12] §21(2) of the Tax and Customs Administration Administrative Fines Decree stipulates that the default fine amounts to: 7% of the statutory maximum.
[13] Section 24b of the Tax and Customs Administration Administrative Fines Decree stipulates that the default penalty amounts to: 50% of the statutory maximum.
[14] The statutory maximum under Article 67ca(1)(a) of the General Tax Act.