Cabinet announces plans for new tax regime for personal income tax and inheritance and gift tax

Publication date 04 September 2013

On September 2, 2013, the Ministry of Finance presented a bill on a new tax regime for personal income tax and inheritance and gift tax: the Act on procedural simplification Dutch Tax and Customs Administration. The aim is to simplify and speed up the process by which the tax liability is determined in future. The assessment period for cooperative taxpayers will be shortened and the procedure will be less formal.

The bill is a reflection of the trend to speed up the process of taxation. It contains a number of new rules for imposing assessments, such as a rule for revising final assessments, new rules for additional assessments and rules for electronic information exchange with the Dutch Tax and Customs Administration.

The bill does not apply to corporate income tax, to which the old regime will remain applicable. With regard to corporate income tax, the feasibility of changing this tax to a remittance tax is still being examined.

Assessment rules and revision
The revision rules that currently apply to provisional personal and corporate income tax assessments will also apply to final assessments for personal income tax and inheritance and gift tax, although in amended form. Under the new regime, the tax inspector must impose an assessment no later than 15 months after the tax return was filed. If taxpayers wish to have the assessment changed, they will have to file a revision request. This request is an easy and informal way for the taxpayer to present additional information, on the basis of which the assessment can be revised. The tax inspector can either approve or reject the revision request. To safeguard the legal rights of taxpayers, the rejection must be a decision open to objection. Under the new regime, the taxpayer must file a revision request within 18 months of filing the tax return. Only after this 18-month period has expired will the tax assessment become final.

Additional assessments
The rules on additional assessments will both restrict and extend the tax inspector’s authority to act. In situations of bad faith, the tax inspector’s authority will be extended, because he will be able to impose additional assessments during a 12-year period, without this having to be based on a new fact. The tax inspector’s authority will be restricted in situations other than bad faith: the period for imposing additional assessments will be limited to three years after the filing of the tax return. In such situations, the tax inspector will only be able to impose additional assessments if the taxpayer knew or should have known that the tax paid was less than it legally should have been. If this is not the case, the tax inspector can only impose additional assessments if a new fact has come to light. The tax inspector will in future also be able to impose additional assessments where large numbers of incorrect assessments were imposed as a result of an error in or disruption to the data processing systems. This is the modern-day version of a ‘slip of the pen’ or ‘typo’. In such cases, the tax inspector must impose an additional assessment within six months after the date of the assessment.

Electronic information exchange
Finally, the bill also states that correspondence between the Dutch Tax and Customs Administration and the taxpayer can only be sent electronically. This obligation will be gradually introduced by way of a personal portal: MijnBelastingdienst.nl.

Effective date
It is not yet known when the Act will take effect, but the intention is to have the changes to taxation apply to tax years from January 1, 2016 onward. The new rules on additional assessments, including the extended 12-year period, will in all probability take effect at an earlier date.