News Update Tax
22 september 2022
On 15 July 2022, the Advocate General published opinions on six cases. The relevant question in these cases was whether tax interest accrues for the period that the taxpayer was actually not in payment default. Below we will discuss the opinion in which the Advocate General takes the position that no interest can accrue in the period the taxpayer is not in payment default.In that case, the taxpayer paid a preliminary 2016 CIT assessment for a taxable amount of EUR 12,833,998. The taxpayer subsequently filed the 2016 CIT return in 2018, resulting in a lower taxable amount (EUR 11,455,622) than the preliminary assessment. The taxpayer received a refund of CIT based on the tax return, without compensation of tax interest. Later on, in that year, the taxpayer filed a revised 2016 CIT return for a higher taxable amount of EUR 11,513,537. The latter resulted in a payable of EUR 14,478. In addition, tax interest accrued for an amount of EUR 1,553. The interest was accrued based on the period 1 July 2017 up to and including 3 November 2018. This period therefore included the period that tax on the preliminary assessment had already been paid to the tax authorities.
Based on current law, tax interest accrues as from 1 July following the relevant tax year, i.e., as from 1 July 2017 for the 2016 CIT return, until the day before the date on which the CIT assessment becomes payable. So, in the case at hand the final payment date of the assessment: 3 November 2018. If the full amount of the tax due in the CIT assessment has been paid in time on the preliminary assessment, no tax interest is due. These provisions resulted in tax interest also being calculated for the period that the tax had actually been paid to the tax authorities, although part of the tax was refunded in 2018. There was no cash disadvantage for the tax authorities in that period.
The Advocate General took the position that a teleological interpretation of the law suggests that the law provides room to conclude that tax interest should not accrue for the period that tax had already been paid. Secondly, the Advocate General is of the opinion that imposing tax interest for the period in which tax has already been paid would constitute a breach of the principle of proportionality (evenredigheidsbeginsel). Furthermore, the Advocate General takes the view that, based on the 'beneficial tax policy' (begunstigend beleid), tax interest should not accrue in the period that the tax is actually in the hands of the tax authorities. Consequently, the Advocate General recommends that the Dutch Supreme Court holds the taxpayer's appeal in cassation well-founded and refers the case to the Court of Appeal to determine the excessive tax interest charged. We look forward to the Supreme Court's decision.