Are you obliged to claim the tax deductions provided for by law in your income tax return? Is the Tax and Customs Administration obliged to inform you of these deductions?
Strange questions?
You may find these questions strange. Of course, you make use of the tax deductions provided for by law. After all, you do not want to pay more tax than is strictly necessary under the law. Nevertheless, these questions are raised in a procedure before the Arnhem-Leeuwarden Court of Appeal.
Significance
In this case, it is in the taxpayer’s interest that the self-employed person’s allowance is not deducted from the profit in 2013 and 2014. This is because, in that case, the entrepreneur will be able to depreciate investments made in 2015 at his or her discretion. To do so, he must be able to claim the start-up allowance in 2015, and this is only permitted if the self-employed person’s allowance has not been claimed three times in the preceding five years.
In his income tax returns for 2013 and 2014, the entrepreneur claimed the self-employed person’s allowance. The tax assessments were issued in accordance with the returns. A request by the entrepreneur to reduce the tax assessments was rejected by the Tax and Customs Administration.
However, following the resubmission of tax returns, additional assessment notices are nevertheless issued in which the self-employed person’s allowance is not included (as the self-employed person’s allowance is not applied, the self-employed person is liable for more income tax). However, once the Tax and Customs Administration becomes aware of this, these additional assessment notices are automatically reduced, meaning that the self-employed person’s tax allowance is ultimately deducted after all.
No choice
The basic principle is that it is up to the taxpayer to claim tax deductions. Whilst the Tax and Customs Administration must draw attention to the existence of tax deductions, it is not required to actively investigate whether a person is entitled to deductions that have not been claimed in their tax return.
However, once a tax deduction has been claimed in accordance with the law, it can no longer be waived. In the case described above, the business owner was entitled to the self-employed person’s tax deduction under the law. Where the Tax and Customs Administration includes this tax deduction in a tax assessment, the taxpayer cannot choose to reverse it.
Supreme Court
Incidentally, the Court’s ruling has yet to be referred to the Supreme Court. The business owner argues that, by imposing the additional tax assessments, the Tax and Customs Administration created a reasonable expectation of compliance. However, the Court of Appeal has ruled that ex officio reductions are not decisions against which an objection and/or appeal may be lodged.