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Less than 6 months left to benefit from Dutch voluntary disclosure decree
On 2 September 2013 a new tax decree on the Dutch voluntary disclosure scheme was issued by State Secretary of Finance Mr Frans Weekers to encourage Dutch taxpayers to voluntary declare information on secret assets. Taxand Netherlands discusses why applying for voluntary disclosure before 1 July 2014 is beneficial and publishes a Q&A.
Foreign undeclared assets, for example bank accounts or trust assets, of Dutch individuals are a thorn in the Dutch Government's side. For years the Dutch Tax Authorities have been hunting and tracing such assets of Dutch citizens. The ‘hunt’ by the Dutch Tax Authorities for undeclared assets convinced more and more Dutch individuals to voluntary declare their secret bank accounts and pay the back taxes due.
The tracing of assets by the Dutch Tax Authorities is part of the global trend in which the tax authorities of different countries cooperate internationally, which is strengthened not only through tax treaties and European Directives, but also through agreements specifically directed towards the exchange of tax information (Tax Information Exchange Agreements (TIEA's)). The current far-reaching international cooperation makes it increasingly difficult for Dutch individuals to sustain possible secret bank accounts.
Voluntary disclosure scheme
The crackdown on foreign assets of Dutch individuals has persuaded many to declare concealed assets held in foreign bank accounts or trusts and to apply for the Dutch voluntary disclosure scheme and pay the tax due on the undeclared income.
Under the new tax decree the applicable penalty for voluntary disclosure of 30% of the tax due is no longer imposed if a taxpayer voluntary informs the tax authorities about unreported assets before 1 July 2014. This decree also applies to voluntary disclosures that are submitted before 2 September 2013, but only if the penalty assessment has not been irrevocably imposed.
However even if the penalty assessment is irrevocable, (ex officio) reduction of the penalty might remain possible. This depends on the commitments and clauses that have been agreed with the Tax Authorities in a settlement agreement.
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Dutch individuals who fail to declare their full income in tax returns, for example by keeping assets on foreign bank accounts or trusts secret, risk additional tax assessments for the amount of the unpaid tax. In addition interest on tax due must be paid and high fines can be imposed. If undeclared foreign assets are discovered by the tax authorities, a much higher fine can be imposed than the 30% fine that is applicable under the Dutch voluntary disclosure scheme. This higher fine can mount up to 300% of the tax due. Moreover, depending on the situation, there is the possibility of prosecution.
To further stimulate taxpayers to voluntary disclose information on, for example, secret bank accounts, the Dutch voluntary disclosure facilities are made more beneficial if information is voluntary disclosed before 1 July 2014.