The VAT returns (Value Added Tax) is not a return you should file straight from the hip (cowboy style), but needs to be done with the utmost care. Otherwise you go to jail, that is certainly not exciting.
VAT returns- exact science
One company charges VAT to another company. For instance a EUR 100 invoice is send plus EUR 21 VAT. The business client pays to the company EUR 121. This company then pays the EUR 21 to the Dutch tax office. The business client paid EUR 121 and claims back EUR 21 from the Dutch tax office.
So a EUR 100 invoice was issued and paid and neither company actually was due in the end VAT. That is the system. Because the only person that actually pays the VAT is the private individual or a company that is not a VAT entrepreneur.
For the Dutch tax office it is very important to actually receive the EUR 21 from the previous example and not for instance EUR 15 instead. Because the business client will charge back EUR 21. If then the Dutch tax office was paid EUR 15 they come up short EUR 6.
The VAT amounts being pumped around are millions, missing out a couple of hundred million is a problem. Hence the Dutch tax office addresses not paying enough VAT as money laundering and the company not paying enough is than addressed as a criminal in court. This is the place no company or person wants to end up. You think.
VAT returns –straight from the hip – court case
Then there are the gamblers. One was running a wholesale store as managing director and sole shareholder. He thought he could gamble what could be the amount of VAT due and accordingly he filed over the years 24 monthly VAT returns straight from the hip. However, it was a safe bet, as he was certain he was not paying too much VAT.
The gamble did so , as he was addicted to gambling. Persistent is the word I think.
The tax office did an audit over the years 2012 and 2013 (mind you, the outcome of this audit was only recently finished) and came to the conclusion that the VAT that should have been paid was EUR 196.742 short. The gambler admitted that he thought that would have been the case.
The court decided that the case of paying too short VAT was proven and sentenced the gambler to two months prison and 240 hours community work. And ofcourse the VAT amount short was due.
A gambler would not be a gambler if he would not take the chance of appeal.
So the gambler appealed that the tax office already sentenced him by asking to pay the shortfall of VAT, hence another verdict for the same crime could not be possible.
The high court disagreed, as the tax office had not issued any penalties to the gambler, so he was not yet punished for his crime. Hence no case of being charged twice for the same crime applied. Moreover the high court was convinced the gambler had it all planned. He deliberately denied the Dutch tax office the tax due. The high court sentenced eight months in prison.
Bottom line of the above is that the VAT return is exact science and not a gamble.