Filing your taxes in the Netherlands as a foreigner can be daunting. For instance, many entrepreneurs may recognize this letter: the ‘intention to deviate from the declaration’. (‘Voornemen om af te wijken van de aangifte.’) The tax inspector indicates that and why he does not agree with the submitted tax return. This often concerns depreciation, deductions or facilities, but it also happens that the Tax Authorities doubt that there is a company and refuse all deductions of costs.
What is the status of such a letter? Formally nothing. You can respond to it in an attempt to convince the Tax Authorities that the tax return is correct. This is often advisable as it can prevent a lengthy and costly procedure. In most cases, however, the inspector will stick to his intention. So don’t be discouraged by a negative response.
Then pay close attention. The intention was not a formal decision, but the subsequent attack was. You can file an objection against that assessment within six weeks. If you do not do this, you lose the right to a procedure. A response to the intention is therefore not a notice of objection. Keep a close eye on this. If the tax authorities issue an assessment that doesn’t align with the tax return after their explanation letter, you must still file an objection to pursue legal action. If you need more time than six weeks to collect the necessary substantiation, you can get this by submitting a so-called ‘pro forma’ objection.
The procedure works as follows: a (different) tax inspector handles the objection case. This often takes several months. You have the right to be ‘heard’. (This hearing is often experienced as disappointing and the summaries that the Tax Authorities make of it are often inadequate.) Sometimes you win the objection procedure, usually not. Both parties (you and the Tax Authorities) can then appeal to the court. There is also a period of six weeks for this and here too you can save time by filing a pro forma appeal. Court proceedings can easily take several months. Afterwards, an appeal to the Court of Appeal is also possible.
Such procedures are annoying to get into, but sometimes essential. Not only because of the impending tax costs (additional assessment, interest, sometimes fines), but also because of the possible impact on later years.
Pro tips:
- Keep a well-organized file;
- Ask for help at an early stage, if only as a ‘second opinion’;
- Respond to the right letter, in the right format;
- Keep a strict eye on the deadline;
- Communicate professionally and impersonally;
- Never go to a hearing alone;
- Consider who the reader is: an inspector who knows the file and assesses his own decision (reaction to intention) or a judge who is busy, does not know the file, has a fresh perspective and wants to make the best possible decision as efficiently as possible take (appeal)?
