02-09-2010
Request for Dutch voluntary disclosure still possible and favourable

International Exchange of Information on tax matters

The Dutch Tax Authorities are actively ‘hunting’ for the undeclared assets of Dutch resident taxpayers. In general, the Tax Authorities throughout the world are cooperating with each other on tax matters. This cooperation is regulated not only by Double Tax Treaties and European Directives on the exchange of information, but also on Tax Information Exchange Agreements (hereinafter referred to as TIEA’s). TIEA’s are bilateral agreements under which countries agree to cooperate in tax matters. These agreements make it increasingly difficult for countries to sustain their bank secrecy regulations.

The point of view of the Dutch Tax Authorities regarding undeclared assets and exchange of information on the foreign assets of Dutch residents is clear: the Dutch State Secretary of Finance has announced that he requires all information on the assets (Het Financieel Dagblad, ‘Ik wil alle informatie over Nederlandse vermogens’, 11 March 2009). In this respect the State Secretary continues to actively negotiate on the exchange of information with foreign Tax Authorities.

The Dutch Voluntary Disclosure Scheme effective 1 July 2010

Dutch tax law encompasses a voluntary tax disclosure scheme which can be used by Dutch resident taxpayers for foreign undeclared assets. Under this scheme, taxes which should have been paid over the last 12 years, if such assets had not been concealed from the Dutch Tax Authorities, are calculated and due. After applying, calculating and fulfilling the tax obligation, one can freely allocate the assets.

Prior to January 1, 2010 the voluntary disclosure scheme could be applied without incurring a penalty. Anyone applying the scheme between January 1, 2010 to July 1, 2010 incurred a penalty of 15%. As of July 1, 2010 the rules were tightened and the penalty has been doubled to 30%, which effectively means that everyone applying this scheme from that date will incur a penalty of 30%.

The penalty will not be imposed on voluntary disclosures made within two years of an incorrect tax return.

Voluntary disclosure is still possible and favourable

Dutch residents who file full and correct information on their undeclared assets, i.e. assets in foreign bank accounts or foreign immovable property, may still take advantage of the Dutch voluntary disclosure scheme. By doing so criminal prosecution and a heavy penalty can be avoided. The penalty for those whose foreign assets are discovered by the Dutch Tax Authorities can mount up to ten times the penalty that could be imposed on people who apply the voluntary disclosure scheme. This means that anyone who fails to declare foreign assets will risk a penalty of maximum 300% of the taxes due.

An important condition, however, for voluntary disclosure is that the competent Tax Inspectorate has not already discovered the undeclared assets. According to the Tax Inspectorate, voluntary disclosure applies if in the actual situation:

-          no questions have been raised by the Inspector concerning foreign assets;

-          the Inspector has not announced any tax audit, during the course of which foreign assets    could be discovered;

-          the Fiscal Information and Investigation Service (FIOD) has not reported that an investigation is being conducted in connection with foreign assets.

As stated above, the Dutch Tax Authorities are actively involved in tracing concealed foreign assets, so that one of the previous situations might arise. In such case, application for voluntary disclosure will  probably be denied.

What can VMW Taxand do for you?

VMW Taxand has intensive experience and the necessary expertise to assist taxpayers in applying the voluntary disclosure scheme. It is essential that voluntary disclosure is prepared with the appropriate care and accuracy. We collect all documentation, calculate the tax due and negotiate with the Dutch Tax Authorities. In addition, we can give you an overview of the (financial) consequences of voluntary disclosure in advance. This will ensure that your voluntary disclosure takes place properly and give you peace of mind. In this regard we have prepared an Q&A, please click here for more information.

For further information, without obligation, please contact Roelof Vos or Chris van Wijngaarden.