Ex officio assessment or random assessment imposed by the Dutch tax office is a method used by the Dutch tax office to get your attention. Most of the time they succeed. It is possible to receive a so called ex officio assessment for Value Added Tax (VAT), Corporate income tax (CIT), wage tax and income tax.
The Dutch tax office has the challenge of collecting the tax they think you are due. For this purposes rules have been set. One of the rules is that you need to file a tax return within the time frame proposed by the Dutch tax office and you need to pay this amount either direct or when requested for.
Random VAT assessment
Being an entrepreneur in the Netherlands most of the time implies you need to file a Value Added Tax return. The moment the Dutch tax office issues the VAT number, you receive a deadline list when to file the VAT return. The frequent deadline is a quarterly deadline. Which implies you need to file the VAT return of the previous quarter in January, April, July and October. If you have indicated to have a very small turnover, you file an annual VAT return. If you indicated you have a high turnover, you file a monthly VAT return.
Not filing the VAT return in time will cause two penalties. One for not filing in time and one for not paying the VAT amount in time. The penalty for filing too late you cannot appeal. Too late is too late. But the other one you can appeal if the amount taken into account as the base for the penalty was not correct. It could be you had nothing to be paid, so the fine needs to be reduced to nil in that case.
You did not file. Then the tax office sends you an ex officio or random VAT assessment of EUR 5 000 or EUR 20 000 or EUR 100 000. The amounts the tax office uses can be random as well. The aim is to get you alarmed. So when your normal quarterly amount to be paid is around EUR 10 000, you receive the EUR 20 000 random assessment. The EUR 5 000 one could make you settle for the lower amount.
In order to get this assessment removed you first need to file the actual VAT return and then appeal the ex officio assessment to have it come in line with the actual too late return filed. The fine for late payment is then adjusted automatically.
An extension for either filing or paying is not possible, as the tax office takes the position you already received the VAT, hence now you need to pay the VAT to the tax office.
Random Corporate income tax
The corporate income tax return is due before June 1 of the following year. Being too late implies you receive a EUR 4 920 fine. However, the first time the Dutch tax office makes it a 50% fine, still being a EUR 2 460 fine. Against this fine only the court provides a solution. The court might reduce the fine to EUR 500. However, before you end up in court there is a long way for which you most likely need assistance. This assistance versus the fine might break even. That said, some clients prefer to pay us instead of the tax office, regardless if the final amount is the same.
The ex officio assessment imposed can only be challenged after you filed the corporate income tax return. You can ask for a small delay in filing (2 weeks) and a delay in payment of the assessment till the appeal has been decided.
Random wage tax
It does happen that the monthly wage tax return is being forgotten to file. The tax office is rather pro active in this field and actual calls the person normally in charge of filing. That can be the client, if the client files its own wage tax return, but normally that is the tax consultant or accountant. We are very pleased with this service. If you file then immediately, no fine is imposed, however, it should not become a habit.
When you do not respond the Dutch tax office will impose an ex officio or random assessment which you have to appeal. But more worrying, you can soon expect your payroll to be audited. To be frank, a payroll audit is one of the worst audits you can have. A simple document missing can have a huge impact in fines. This is due to the rather formal law that underlies the wage tax.
Random income tax
At the end of the year you need to file an income tax return before May 1 if you have been invited to file one and if you know you have to file one. You aught to know when you had either multiple employers in one year, profit income, other income than employment income, own a house, have Box 3 assets exceeding the threshold.
If you expect a refund, it is best to file before April 1, as then you have the amount in your account before July 1. If filed after April 1, the tax office officially has two years time to decide on your return.
Not filing the tax return in time most of the time results in a warning letter. A reminder is send to file the tax return immediately. If done so, no fine is imposed. However, when you do not respond, you receive a EUR 256 fine the first year you are too late. The next time the fine is EUR 984. A third time we have not experienced yet. I can only assume that by the time you do not respond to the second year, the tax office is going to audit your case. Hence you learn you should not do this a third time.
Orange Tax Service
The tax office is keen to issue penalties to make you respond because it keeps to national moral to comply with the rules set high. A high moral yields a good tax result and that pays the public bills.
That said, not acting on a random or ex officio assessment will hunt you for years. All tax returns are connected to each other. The VAT determines the turnover, hence the profit for the income tax return. The VAT can be the base of wage to be paid and corporate income tax due. That implies you cannot skip a return and simply pay the ex officio assessment.
We can assist you in filing the tax returns in time in the first place. That is our aim as it prevents you from too much exposure to the Dutch tax office. It can happen that you miss a return and then we can assist you in filing this tax return, appealing the ex officio assessment and have you continue to do what you are good at.