District Court overturns interest on tax charge
The levying of an income tax assessment will involve the tax payer being charged with interest on (unpaid) tax in respect of the period from the date of expiry of a six-month term of the end of the tax year under review until the payment due date of the assessment. No interest on tax at all will be charged on condition that the assessment should have been levied in accordance with the underlying tax return and the latter was filed before the first day of May of the year following the tax year under review, with the interest on tax being mitigated where the aforementioned due date for filing has been missed but the assessment as such has been levied in accordance with the underlying tax return. The latter scenario will involve the interest on tax charge being confined to a period of no more than 19 weeks of the date as at which the Tax and Customs Administration received the tax payer’s income tax return.
The Supreme Court of the Netherlands on application of the proportionality principle having previously established that particular circumstances warrant the charging of interest on (unpaid) tax being moderated or left out altogether, the District Court on application of said proportionality principle decided that no interest on (unpaid) tax was to be charged in the following scenario. Having previously filed a joint income tax return and having paid the subsequent tax assessment, a pair of tax partners each filed an amended tax return resulting in one of them netting a refund in the amount of 18,091 euros whereas the other was charged an additional 15,323 euros in tax augmented by interest on tax. Arguing that the Tax and Customs Administration for the duration of the entire period in respect of which interest on tax had been charged had had the disposal of a greater amount than that owed by the two partners jointly, the District Court in summing up stated that strict adherence to the letter of the law in this particular case could only render the outcome disproportionate to the object and purport of the law, which warranted the taxman’s decision to charge interest on tax being overturned.
Dutch version: Rechtbank draait berekening belastingrente terug