Tax penalty and accessory penalty
Tax assessments can come with high penalties. If the Dutch Tax and Customs Administration has announced that it is going to impose a fine or if a fine has actually been imposed, you have six weeks to file an objection or refer the matter to a court, if necessary.
With effect from 2009, the tax authorities have had the option to impose a fine on both taxpayers and their associates for effectively leading the sanctionable conduct or participating in it. In 2014, organisers, instigators and accessories also became subject to fines.
A failure to file a tax return or to file within the filing deadline, or a failure to pay tax or to pay within the payment deadline is subject to a default penalty (Sections 67a, 67b and 67c of the Dutch State Taxes Act, respectively). Default penalties have been capped at about €5,000.
If, in the opinion of the tax authorities, your failure to file a tax return or to file it within the deadline is due to gross negligence or conditional intent on your part (Section 67d of the State Taxes Act), the amount of the tax assessment is too low (Section 67e of the State Taxes Act) or you have not paid any tax, underpaid tax or missed the payment deadline (Section 67f of the State Taxes Act), they may decide to impose a punitive fine. A punitive fine will not be imposed unless you are accused of a serious tax violation. The fine can run up to 100% of the amount of the revised or additional tax assessment. The fine for undeclared savings can be as high as 300% of the amount of tax due. The severity of these fines reflects the interests involved.
In general, the fine will be imposed at the same time as the revised or additional tax assessment. For this reason, penalty proceedings will typically run parallel to the objection or appeal proceedings challenging the tax assessment.
Punitive fine and evidentiary rules
It is up to the tax authorities to demonstrate convincingly that the taxpayer acted with intent. If the taxpayer is accused of intentionally failing to file a tax return, the tax authorities are expected to prove that the taxpayer was not only asked to file that particular tax return, but also that a demand for filing was sent. Unlike the evidentiary rules governing a tax assessment, the rules of evidence in penalty law strongly resemble those in criminal cases. In penalty proceedings, there are more options for excluding unlawfully obtained evidence, for instance, than in proceedings contesting a tax assessment.
In our experience, the Dutch tax authorities are not always successful in demonstrating convincingly that a taxpayer acted with intent. That is why the evidence submitted by the tax authorities to support the imposition of a fine should always be reviewed carefully. As a taxpayer, you have options; you can either file an objection to the fine or refer the matter to a court.
Sanction and defence
In mounting a defence against the level of a fine, the taxpayer's specific situation is a decisive factor. Although the Dutch Tax and Customs Administration’s policy rules instruct the tax inspector to make allowance for aggravating and mitigating circumstances when setting the penalty amount, this is not always feasible in practice, for instance because the tax inspector does not have enough information about the mitigating circumstances or because the circumstances are not appreciated for what they are. That is why we are very much in favour of regard being had for the human dimension when fines are imposed.
To successfully conduct penalty proceedings, a lawyer has to have knowledge and experience of tax law and procedure and criminal law and procedure. Fines are always unwelcome of course, not just because they constitute a sanction and cost money, but also because they may be detrimental to your career or your social standing, or to your being able to procure banking or insurance services. Our lawyers know all the ins and outs of penalty law and would be happy to help you navigate its intricacies.
Accessory penalty/associate penalty
The option to impose punitive fines on accessories to, and effective leaders of, sanctionable conduct was introduced a number of years ago (Section 5:1 of the Dutch General Administrative Law Act). Organisers, instigators or accessories are subject to penalties as well (Section 67o of the State Taxes Act). Given that these concepts were borrowed from criminal law, it is crucial that lawyers representing clients in accessory penalty proceedings are well-versed in criminal law.
We have long-standing experience with all stages of accessory penalty proceedings, from the moment a fine is announced and/or imposed on an accounting or consultancy firm to the litigation phase before the Supreme Court. Thanks, in part, to our experience representing accessories and associates in criminal cases, we can save you from the pitfalls attached to your client services, such as conflicting interests or reliance on a reasonably arguable position.
Contact our specialists
G.M. (Mariëlle) Boezelman
A.A. (Anke) Feenstra
P.J. (Peter) van Hagen
A.J.C. (Angelique) Perdaems
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