Avoid unnecessarily high tax interest in the Netherlands

11 February 2021
Article

Both companies and individuals can be charged tax interest if they have to pay additional tax. To prevent this, you must pay a sufficient amount on time, using a provisional assessment. Five actions you can take.

Portrait photo of Jeroen Geers
Written by:
Jeroen Geers Manager tax advisory
tax

Submit your application on time

Apply for a provisional assessment for corporate income tax and/or personal income tax for the year 2020 to the Netherlands Tax Authority in good time, and no later than 1 May 2021. Has a provisional assessment for 2020 already been imposed, but is it expected to be too low? Ask to have the provisional assessment adjusted before 24 March 2021.

Watch out for negative savings interest

Be careful: various banks will not pay out any interest on existing bank savings. With a certain amount, you may even have to pay interest in order to save. There is then a so-called negative savings interest. In that case, you need to make sure you submit an application for your (provisional) assessments and pay them as soon as possible. This prevents you from paying (unnecessary) interest on your savings and also having to pay tax interest to the Tax Authority.

Don't wait too long with your assessment

The Tax Authority will charge interest if the (provisional) assessment has been delayed for too long due to the actions of the taxpayer. In other words: tax interest is compensation for missed interest by the Tax Authority. If it turns out that you have to pay a (provisional) assessment for corporate income tax or personal income tax, you (the taxpayer) may owe tax interest on that amount. With effect from 1 July 2021 (the first day after the end of six months after the end of the (financial) year to which the assessment relates), the Tax Authority calculates tax interest. This ends on the day before the day on which the assessment must be paid at the latest, normally six weeks after the date of the assessment.

Is there a split financial year? In that case, tax interest will be charged from the first day of the seventh month following the end of the financial year.

Is an assessment imposed within six months after the end of the financial year? In that case, no tax interest will be charged.

Pay a tax assessment on time

The Tax Authority charges additional collection interest if you pay a tax assessment late. From the time of the expiry of the payment term (usually six weeks after the date of the assessment) until the day of payment, the Tax Authority charges collection interest. Therefore, always pay your assessments on time!

Interest rate

The tax interest for corporation tax is aligned with the statutory interest rate for commercial transactions, with a minimum of 8% (!). For other taxes, including income tax and collection interest, the statutory interest rate for non-commercial transactions is used. In addition, a minimum percentage of 4% applies.

Temporary reduction in tax and collection interest
The collection interest has been temporarily lowered to 0.01% as a result of the COVID-19 crisis. Besides, from 1 October 2020, a tax interest of 4% applies to all taxes, including corporate income tax. These temporary reductions apply in any case until 31 December 2021.

Avoid unnecessary tax interest with these tips

Do you expect your company and/or you personally have to pay corporate income tax or personal income tax on 2020? Then take one of the following actions in time. This way you can reduce or completely avoid tax interest.

Tip 1 - Apply for a provisional corporate income tax assessment

Apply for a provisional corporate income tax assessment before the first day of the fifth month after the end of the financial year. For a financial year that is the same as the calendar year, the application for the year 2020 must be submitted before 1 May 2021. In the case of a split financial year, the application must be submitted within four months after the end of the financial year.

Tip 2 - Submit your application on time

Apply for a provisional income tax assessment before 1 May 2021. If and to the extent that a final assessment differs from the provisional assessment, tax interest might still be owed.

Tip 3 - Too low provisional assessment

Is the already imposed 2020 provisional assessment expected to be too low? Then it must be adjusted before 24 March 2021. The period of fourteen weeks (eight weeks plus six weeks for payment) that the Tax Authority has to respond to the application will then end on 30 June 2021.

Tip 4 - Too high provisional assessment

You can have a provisional assessment that is too high adjusted to improve your liquidity position. Again, you must adjust it before 24 March 2021. The period of fourteen weeks that the Tax Authority has to respond to the application will then also end on 30 June 2021.

Tip 5 - Provisional assessment 2021

As long as there is uncertainty about the expected taxable amount after allowances for 2021, the recommendation is to have a provisional assessment 2021 that is not too high. During 2021, but no later than the beginning of 2022, you can estimate what the taxable amount after allowances for 2021 will be. You can then, based on that estimate, have the provisional assessment 2021 adjusted.

More information

Do you have questions about applying for a provisional assessment? Please contact our tax consultant Jeroen Geers on +31 (0)134 647 288 or send Jeroen an e-mail.

Do you want to know more? Our specialist will gladly assist you!

Email Jeroen
Portrait photo of Jeroen Geers
Manager tax advisory
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+31134647288