“A fine is a tax for doing something wrong.
A tax is a fine for doing something right.”
Every year the tax authorities choose one specific topic which they look at in more depth when they audit the tax returns they have received. For the 2010 tax return the tax authorities will look specifically at the date the tax return was filed. Important is that the tax return is filed in time. The standard deadline for filing a tax return is April 1. If the tax authorities have sent the invitation to file a tax return after March 1, then the deadline will be the first day after a full month has passed since the date of the invitation. So if you receive an invitation to file a tax return dated May 15, the deadline will be July 1.
It is possible that you don’t receive an invitation. In that case there is no deadline. But if you know that you have to file a tax return because you have to pay additional income tax and didn’t receive an invitation before July 1 then you will have to request an invitation before July 15.
Due to many possible reasons it can happen that you won’t be able to file the tax return before the deadline. In that case you can request the tax authorities to grant you a time extension. This should not be a problem. The tax authorities will extend the deadline till September 1. When you ask for an extension you don’t have to provide a reason. If you use the help of a registered tax advisor a time extension will be arranged by your advisor under their time extension ruling with the tax authorities. Under this ruling the time extension will last till May 1, 2012.
If the tax return is not filed before the deadline the tax authorities will send a notice that you didn’t file yet. This is not an “official” warning, but shouldn’t be ignored. If the tax return is still not filed the tax authorities will send a formal reminder, giving another 10 working days to file the tax return. If the tax return is not filed within these 10 working days a fine will be imposed. Once a reminder is received it is no longer possible to arrange a time extension. Be aware that even if you file before the 10 working days have passed, you officially still filed late. Although you will not receive a fine, the late filing can have consequences for a future request for a time extension.
Recently the tax authorities (again) sent reminders for 2008 and 2009 tax returns. For the 2010 tax returns the tax authorities will act faster. They have told that the first reminders will already be sent out in May this year.
While the tax authorities will act faster and look more specifically at the filing date also the fines for late or no filing have gone up. This has led to a lot of discussion in the newspapers the last couple of days. And not without reason, the fines were raised with more than 400%!
What are we talking about?
The standard fine for filing late is € 226. Filing late for the second time will lead to a fine of € 984 (20% of the maximum) and for the third time the fine will go up to a maximum of € 4,920.
The standard fine for filing late is € 2,460 (50% of the maximum). If a tax return is filed late repeatedly the fine will go up to a maximum of € 4,920. For corporate income tax returns the standard deadline is June 1.
Besides fines for filing late there are also fines for providing wrong or incomplete information in the tax return. This fine can go up to 100% of the tax paid less because of the mistake. The percentage depends on the reason why the mistake was made. Was it a real mistake or was it fraud? If it concerns a real mistake the fine is normally 0%. But if the tax authorities can proof that the mistake was made on purpose the fine can be 25%, 50% or even 100%.
Some other examples of possible fines are:
It is always possible to object against a fine which is issued by the tax authorities. This must be done within 6 weeks after the date of the tax assessment stating the fine. The tax authorities will have to explain why they have given a fine. In the objection certain reasons can be given why the fine is too high. A list of possible reasons is available. However, it is better to prevent the fine than having to object against the fine.
So make sure that you file your tax return before the deadline. Request a time extension if you can’t meet the deadline. If you are not sure what to do contact a tax advisor who can assist you with everything.
Managing Director Expatax BV and Ask-the-expert on Expatica