How can you avoid a fine for submitting an incorrect tax return?
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If you file a tax return in the Netherlands, you must provide the correct information. Sometimes things go wrong – for example, because you forget to include an amount or fail to check a document properly. In this article, you can find out how to avoid a fine.
When might you be fined by the Dutch tax authorities?
The Dutch tax authorities may impose a fine in certain situations. This may happen, for example, if you do not comply with the rules.
You may be fined if:
You do not request a tax return form, or do not request it in time
You do not submit your tax return, or you submit it late
You complete your tax return incorrectly or incompletely
You do not pay the tax you owe on time.
Not every offence results in an immediate fine
If you accidentally make a mistake, it does not always mean you will be fined straight away. It is, however, important that you correct the mistake as soon as possible.
Late filing fine
A late filing fine is a fine imposed for failing to do something or for doing it too late. For example, if you do not submit your tax return on time or do not pay your tax on time.
You may receive a late filing fine in the following situations:
1. You do request a tax return form in good time
Sometimes you have to request a tax return form yourself. If you do not do so, or if you do so too late, you may be liable for a late filing fine. If you do not request a tax return form on time, the fine could be €3,354.
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2. You either fail to submit a tax return or submit it too late
You may also be liable for a late filing fine if you fail to submit your tax return or submit it late. This applies if you still fail to file your tax return after receiving a reminder or a formal notice.
If you fail to file a tax return or file it late, the fine may be €469. This applies, for example, to income tax.
If you are frequently late or fail to submit a tax return, the fine can be as high as €6,709.
If you fail to file a
Is it really not your fault that you were late? If so, the Dutch tax authorities may decide not to impose a fine.
3. You do not pay your tax on time
You may also be fined if you are required to pay tax but fail to do so on time. This is known as a late payment fine. This can happen, for example, with income tax.
If you do not pay your tax, do not pay it in full, or pay it late, you may be charged a late payment fine. This fine is 5 per cent of the amount you still owe. The fine is a minimum of €50 and a maximum of €6,709.
If the amount you have to pay is subsequently reduced, the Dutch tax authorities will usually reduce the fine as well. However, the fine will still be at least €50.
Fraud penalty
You may receive a fraud penalty if the Dutch tax authorities believe that you have deliberately failed to file a tax return or have provided incorrect information. If you have deliberately concealed income, the penalty may amount to 50 per cent of the tax you have failed to pay.
Sometimes the Dutch tax authorities discover at a later date that you have underpaid tax. In that case, the tax authorities may send you a new tax assessment. This is known as a supplementary tax assessment.
You may also receive a fraud penalty if the Dutch tax authorities consider that there has been gross negligence. Gross negligence means that you have been extremely careless.
In the event of gross negligence, the fine may amount to 25 per cent of the tax you have failed to pay.
Higher fines on savings and investments
Stricter rules apply to income from savings and investments. This is known as ‘Box 3’ income. Examples include savings, investments or other assets.
If you deliberately fail to declare Box 3 income, or declare it incorrectly, the penalty may be 150 per cent of the tax you have failed to pay.
If there is a serious error in relation to Box 3 income, the penalty may be 75 per cent.
The Dutch tax authorities may also increase or reduce the fine. For example, if you have previously been fined for an offence, the fine may be higher. The fine may also be higher in cases of fraud.
In that case, the penalty may amount to 100 per cent. For Box 3 income, the penalty may then amount to 300 per cent.
If there are exceptional circumstances, the Dutch tax authorities may sometimes reduce the fine.
VAT and payroll taxes
A short additional period applies to VAT returns and payroll tax returns. This is known as a grace period. This period is 7 calendar days after the deadline for filing the return. If your return is submitted within these 7 days, you will not be fined. If your return is submitted later, or if you do not submit a return at all, you may be fined. The fine is €82 for VAT and €83 for payroll tax.
How to avoid a fine for an incorrect tax return
1. File your tax return on time
The best way to avoid a fine is to file your tax return on time. Check the date on your tax return notice carefully. It states the deadline by which your tax return must be received by the Dutch tax authorities.
Are you unable to file your tax return on time? If so, apply for an extension in good time. Do this before the deadline by which your tax return must be received.
2. Check the pre-filled details
In ‘Mijn Belastingdienst’, a lot of information is already pre-filled. For example, your salary, benefits, bank accounts or mortgage details.
Always check these details carefully. The pre-filled details may contain errors or be incomplete.
3. First, gather all the documents
Do not start filling in the form too quickly. First, gather all the documents you need. These might include, for example,
4. Also declare any foreign income and assets
Do you live in the Netherlands? If so, you will usually also need to declare your foreign income. For example, wages from another country, a pension from abroad or income from a property abroad. Foreign bank accounts, savings, shares and investments may also be relevant to your tax return. This does not always mean you will pay double tax. Sometimes you are entitled to a scheme to prevent double taxation.
5. Pay close attention to tax deductions
Tax deductions can reduce the amount of tax you pay. Examples include certain healthcare costs, charitable donations or mortgage interest. Only claim deductions if you are entitled to them. Make sure to keep supporting documents, such as invoices, payment receipts or annual statements. If you are unsure whether you can deduct something from your tax, check the website of the Dutch tax authorities. You can also ask for help.
6. Keep your evidence
The Dutch tax authorities may ask for an explanation or evidence at a later date. For example, regarding tax deductions, income, savings or assets held abroad. Are you self-employed? If so, you are usually required to keep your records for 7 years. For some types of information, such as documents relating to property, a longer retention period may apply.
7. Make a copy of your tax return
Always save a copy of your tax return. Also keep the documents you used. That way, you can check what you’ve entered later on. This is useful if you receive a query from the Dutch tax authorities or if you discover an error.
8. Correct any errors as soon as possible
Have you realised you have made a mistake after submitting your return? If so, amend your return as soon as possible via 'Mijn Belastingdienst'. Even if you have already received a final tax assessment
9. Correct your return if you notice a mistake
If you have previously filled in something incorrectly or incompletely, you can correct this yourself. This is known as a voluntary correction. If you report the error yourself in good time, this may help to prevent or reduce a penalty.
10. Ask for help if you are unsure
Filing a tax return can be difficult. This is particularly true if you run your own business, have income from abroad, have bought or sold a house, hold cryptocurrency, or wish to claim numerous tax deductions.
If you are unsure, ask for help. You can seek assistance from the Dutch tax authorities, a tax adviser, an accountant, a library or a support organisation in your municipality.
11. Always reply to letters from the Dutch tax authorities
If you receive a letter from the tax authorities, read it carefully and reply in good time. Failure to reply can lead to further problems, such as an estimated assessment of your income or a fine.
12. If you do receive a fine, you can lodge an objection
If you disagree with a fine from the Dutch tax authorities, you can lodge an