Additional assessment for income tax or VAT: the difference, the deadlines and your options

Two kinds of assessment, two kinds of tax

For income tax you file a return and the tax authorities then impose an assessment. If that final assessment later turns out to be too low, an additional assessment (navorderingsaanslag) follows. As long as there is no final assessment yet, that extra step is not needed: the inspector simply adjusts the assessment when imposing it. He has three years after the end of the tax year for that, extended by any extension you had for filing.

VAT and payroll taxes work differently. You calculate, declare and pay them at the same time, without an assessment in between. If you paid too little, or paid late, the tax authorities impose a post-assessment (naheffingsaanslag). That can follow a tax audit, but also simply a late payment. Bogus self-employment also leads to post-assessments, in that case in the client's payroll taxes.

The new fact in an income tax additional assessment

The tax authorities may not simply revisit an assessment that is already final. An additional income tax assessment generally requires a new fact: information the inspector did not know when imposing the assessment and could not reasonably have known. Think of a client reporting your invoice amounts, data from a foreign bank or revenue that surfaces during a client's audit. If the inspector himself made a mistake with information he already had, that is not a new fact and an additional assessment is usually not possible.

There are two important exceptions. If you did not act in good faith, for example because you deliberately left out revenue, no new fact is needed. And if the assessment is too low because of an error you should reasonably have noticed, such as a refund far higher than your return suggested, the tax authorities may correct it without a new fact. For a VAT or payroll post-assessment the new fact plays no role: because there was no earlier assessment, the tax authorities may always assess within the deadline.

Tax interest and penalties

Almost every additional assessment comes with tax interest, over the period the money reached the tax authorities late. For income tax it runs from 1 July after the end of the tax year, so with an additional assessment that arrives years later it can add up considerably. How to avoid interest as much as possible is covered in avoiding tax interest.

A penalty is something other than interest. If you pay VAT late, a default penalty follows, imposed with the post-assessment. If gross negligence or intent was involved, the tax authorities can impose a culpability penalty. The law allows up to 100 percent of the additional tax; in practice the tax authorities usually start at 25 percent for gross negligence and at 50 percent for intent. For a culpability penalty the tax authorities do have to prove that negligence or intent.

The assessment has arrived: what now?

First check whether the deadline was still open. For an income tax additional assessment count five years from the end of the tax year, plus the length of your filing extension; for a VAT or payroll post-assessment five years from the end of the calendar year. Then check whether there really is a new fact and whether the amounts match your records. If you disagree, object within six weeks of the date on the letter, as described in objecting to an assessment.

Objecting does not automatically suspend payment. So request a deferral of payment at the same time for the amount you object to. If the assessment is correct but you cannot pay it in one go, apply for a payment arrangement before the payment deadline passes; see unable to pay your taxes. Waiting for reminders only makes it more expensive.

Frequently asked questions