You registered yourself as entrepreneur with the Chambers of Commerce some time ago and now you receive in the mail a EUR 5.000 Value Added Tax assessment from the belastingdienst plus fines. What is happening?
Value Added Tax assessment due to missed deadline
The moment you register a company with the Chambers of Commerce, the Chambers of Commerce reports you as an entrepreneur with the Dutch tax office. The Dutch tax office then activates for you a so called Value Added Tax (VAT) number.
You receive about a fortnight after you registered with the Chambers of Commerce blue envelopes with the announcement of your VAT number, with the VAT deadlines, the VAT username and the VAT password.
The trick is to try to understand these messages or contact a company (us!) that knows what to do.
What not to do?
Often the new entrepreneur has not understood it is an obligation to file the VAT return, as in other countries like the United Kingdom, there is a different system. Or it is being assumed that as nothing no turnover was created in the company yet, there was no filing obligation.
To prevent the Value Added Tax assessment due to missed deadline you need to file in time. Obvious answer, but still the correct answer. The tax office does not take into account VAT systems used abroad and the tax office does not know you have nothing to be reported, until you report a zero VAT return.
Now you received the EUR 5.000 assessment, what to do?
Doing nothing will make you experience how it is to live in a nightmare, believe me. The tax office is the collector of the Government and the VAT income pays for the Government expenditure. So crucial is the word for the tax office to collect the VAT. Hence a rigid system is in place.
If you are too late filing the VAT return, you get a EUR 65 penalty. Too late is too late, so no possibility to argue this penalty. Paying too late is also a penalty, but a percentage of the amount due. How high the percentage is depends on the amount due but also on your history of being late with VAT payments. This penalty we might be able to argue if there is nothing to be paid.
The EUR 5.000 is an amount the tax office has the opinion that this makes you worried to the extent that you seek advice. That is exactly what is the purpose of this assessment. The advice needs to make you aware you missed a very important obligation. The advice can help you comply, the advice can help you reduce the penalties.
We, Orange Tax Services, are the advice.
In the event you do not contact an advisor to assist you, but you basically chose to ignore the assessment and hope it will simply disappear, then you will become acquainted with the tax office collector. Not in person, but on paper. On paper the collector is keen to state that they are collecting this amount with you and the collecting fees for the simple letter send are EUR 498 in about 2 months’ time.
If you then still do not reply, this collecting fee easily goes through the roof, but then you will meet the collector in person, while they are taking possession of your belongings. Your house you own is capital the tax office can sell to pay for this silly assessment. To put it in perspective.
Collecting fees we cannot argue.
The EUR 5.000 Value Added Tax assessment due to missed deadline
What if you simply pay the assessment as you happen to have money in the bank? We have seen that happen. Then the next quarter you do not file, you get the same assessment. If you pay that again, the next quarter the tax office sends a EUR 7.500 ex officio assessment plus fines. Assuming that will make you respond. But the client we had, simply paid that one as well. Then he got a EUR 8.500 assessment. By the time the assessment was EUR 11.000 plus fines, he started to contact us.
The funny thing in this case was that the actual VAT he should be paying was much higher than the ex officio assessment. Still that does not imply you do not need to file the Value Added Tax assessments.
Orange Tax Services
Value Added Tax assessment is being received by you, what to do?
Please contact Orange Tax Services, we help you through the process of filing the correct VAT return, filing a complaint against the ex officio assessment and we are keen to prevent this from happening again by taking you up as a quarterly client for the Value Added Tax return, the bookkeeping, annual tax returns and what other accountancy service you require.