Correction VAT return or in Dutch: Suppletie aangifte BTW is an obligation. The obligation occurs when not the correct amount of VAT has been reported for a year.
Correction VAT return
The Value Added Tax (VAT) system is a closed circuit. The VAT is in the end paid by the private consumer or the company not being a VAT entrepreneur.
Example. You charge EUR 100 plus EUR 21 VAT to a client. That client is a company and receives your EUR 121 invoice. You need to pay EUR 21 to the Dutch tax office, your client claims from the Dutch tax office EUR 21. In the end you earned EUR 100, the client paid EUR 100 and the tax office had a neutral transaction.
This example shows the importance from the tax office perspective for everybody to report correctly the VAT. To help companies filing the correct VAT return, penalties have been put in place.
Update VAT return
Officially if you file a quarterly VAT return and you report an item in the wrong quarter, that is already a correction you need to make. Practically within the calendar year you can make this correction in the next quarter. During an audit the Dutch tax office will not share this view, but will work with the solution.
Correction made in a previous year, needs to be made in the previous year. That is done by separate request.
The tax office has the opinion that if a company never makes a correction, the bookkeeping is probably not correct, as human beings are in charge of the bookkeeping.
A company had received an audit from the Dutch tax office. The conclusion was that a 50% penalty was issued for the year 2014 and for the year 2015. The amounts are EUR 7.200 and EUR 12.800 in penalties.
The company argued these penalties as they send a VAT correction by post to the Dutch tax office. Apparently that never arrived. The tax office argued that a deliberate mistake in the books were created, hence the fines.
The court ruled that a deliberate mistake is only one that can be proven. And as the company claims it has send the corrections, there is no proof of deliberate mistake. The penalties were erased, but the court did state the company should have followed up on their corrections themselves.
Tax is exciting
We think tax is exciting. Penalties are never exciting. We also use postal services for communications with the Dutch tax office. Our experience is that so often our mail ‘does not arrive’, so we now use registered mail for most postal messages. Either the postal service level has dropped this dramatically or the Covid work method with the Dutch tax office makes mail is ill received.
In this case I wonder if the audit was a true random audit or a result of very late received messages by mail. Sometimes we receive the quarterly bookkeeping send by mail a full quarter later. So we switched to full digital.
That the company did not chase their own VAT corrections we can also understand. If you learn you paid not enough VAT, you update the Dutch tax office and the Dutch tax office decides not to act on that. Why insist on that. The fact that your message never reached the Dutch tax office was not taken into account.