While doing business in the Netherlands or being a Dutch tax resident, you can expect at a certain point in time to become subject to a tax audit. The tax audit of the income tax returns are done most of the time by letter. The tax office makes inquiries about certain aspects of the tax return, you respond to those inquiries. But what about your business, how is the audit done then?
The audit of the business is most of the time per type of tax. You can have a wage tax audit, value added tax audit or a corporate income tax audit. Most audits we encounter are wage tax audits and value added tax audits.
The tax office will announce itself in writing, inform you about the documents they would like to examine and for what time period. Such investigations can go back a maximum period of 5 years. The new proposed changes are that the maximum period to go back will be limited to three years, unless it is clear that deliberate tax avoiding actions were taken. Under the new proposed rules the maximum period for the investigation will then be twelve years. Twelve years is a bit strange to me, as you only need to keep your bookkeeping for seven years.
The result of the audit can be many. But in case the auditors have the opinion that the administration was not up to date, but with some small changes, will be up to date. Then you can expect the tax office making these adjustments and most likely a penalty of between 10 and 25 percent will be added. In worse cases, so the administration was far from ok, then adjustments are made as well, but then the penalties go from 25 to 100 percent. Moreover you can expect an audit every year. Such adjustments can make the company go bankrupt. The tax office stand point in these matters is that the tax should have been paid from the start.
We therefore recommend you always to use the services of a dedicated office such as Orange Tax Services. We inform you how to set up your administration, how to keep the administration in order, and can assist you in case of an audit.