VAT supplementary return

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You realise that a VAT return you have submitted contains a minor error. Do you need to submit an amended return?

Duty to provide information on one’s own initiative

Yes! The law requires you to report any errors you discover in a submitted VAT return to the tax authorities yourself within a reasonable period of time (duty to provide information on your own initiative).

You must submit the notification using the appropriate form: a supplementary declaration. From 2018 onwards, this form can only be submitted electronically, via:

• the entrepreneur’s personal account on the Tax and Customs Administration’s website;
• suitable (accounting) software.

Up to €1,000

If the over- or under-declared VAT amounts to €1,000 or less, there is no need to submit an amended return. The correction may then be included in the first periodic return, which must be submitted after you have discovered the error.

This approval is not required by law, but is stated on the Tax and Customs Administration’s website. The advantage of this procedure is that no fine will be imposed.

PLEASE NOTE: this approval does not apply to situations in which a supplementary return may not be used (refund under the annual flat-rate margin scheme and intra-Community acquisitions declared in two countries).

Explanation of the land reclamation declaration

Apart from the obligation to provide information on an ad hoc basis, the supplementary VAT return does not, as such, yet have any real formal status. If the supplementary VAT return results in:

• to pay amount: is this a request for the imposition of an additional tax assessment;
• to received amount: is this a request for a (discretionary) refund?.

Submit your tax return correctly and on time

VAT-registered businesses are required, within one month of the end of a tax return period, to:

1. to submit an accurate and complete VAT return;
2. to pay the amount of VAT due on this return.

You must recognise the VAT in the accounting period in which the invoice date falls (invoice-based method). If you use the cash-based method, you recognise the VAT in the accounting period in which payment is received.

It is not permitted to use a rolling cumulative calculation.

Example 1:

The correct way to declare this is as follows:

This is permitted if the underpaid VAT amounts to €1,000 or less.

Example 2:

The one in the 1^e In Example 2, the amount stated for the quarter differs by less than €1,000 from the VAT amount that was due.

Fines

If one or both of these obligations are not met, or are not met in full, the Tax and Customs Administration may impose:

• fine for non-attendance;
• penalty for an offence.

Criminal proceedings may be brought in the case of very serious offences.

For a absenteeism fine It is sufficient that a failure to comply has occurred. It is irrelevant whether the business owner can be held responsible for this. Failure-to-comply fines are therefore often imposed automatically. However, a failure-to-comply fine cannot be imposed where there is a complete absence of fault (AVAS). In the event of mitigating circumstances, the penalty is reduced.

To create a offence fine In order to impose a penalty, there must at least be gross negligence (“negligence bordering on reprehensibility”). A penalty for an offence is calculated on the basis of the under-declared VAT and ranges from 25% to 100%. The penalty is reduced where there are mitigating circumstances.

Side by side

It is important to note that, in the event of failure to comply with the periodic return and payment obligations, the Tax and Customs Administration may impose a default penalty both for the failure to submit the return (on time) and for the failure to (timely) payment of the VAT amount due as shown on the return. However, this combination of offences may give rise to a reduction in the total penalty.

Voluntary improvement

In the case of a voluntary correction, a fine is often waived entirely. You are making a voluntary correction if you submit the supplementary return before you have any reason to suspect that the tax authorities are (or may be) aware of the error.

A supplementary return submitted before 1 April of the year following the year in which the VAT is due is always treated as a voluntary correction for the purposes of a penalty for an offence.

In the case of a penalty for under-declaration, the following additional conditions apply: the amount of VAT under-declared must be less than:

• €20,000 and
• 10% relating to VAT payable or refunded during the period.

Short-term deferral of payment by telephone

Where a business owner, following the issue of a supplementary VAT assessment, successfully applies for the scheme allowing a short-term deferral of payment by telephone, the late payment penalty is reduced to zero.

Opinion

1. Ensure that your administrative procedures are such that the correct amounts of VAT are always declared and paid on time.
2. In the unlikely event that it transpires that something has gone wrong in this regard and, as a result, the (additional) amount to be paid or received is:
   1. €1,000 or less: in that case, include the correction in your next periodic tax return;
   2. more than €1,000: in that case, submit a supplementary return electronically as soon as possible (you must wait for the additional tax assessment before paying the amount due).

The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWG is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.