Dutch (tax) law does not provide for a legal definition of tax fraud. In general - and for purposes of this questionnaire - tax fraud relates to (e.g.) intentionally not, not timely or not fully meeting the required legal obligations (e.g., submitting the correct tax return / pay the required tax claim or providing incorrect or incomplete information to the tax authorities).
In general, it is not possible to impose both administrative sanctions (such as tax penalties) and criminal sanctions simultaneously on the same conduct (una via doctrine). This means that the same criminal action cannot be penalized more than once. As a result, if certain tax penalties were imposed it is no longer possible anymore to prosecute the same conduct in a separate criminal procedure.
However, it is (theoretically) possible that the application of tax penalties (i.e., administrative sanctions) can be considered as an indication for other criminal conducts. In such case, the tax penalties can potentially trigger (further) investigations by the Tax Authorities and/or the Public Prosecution Service.
In general, certain amounts of tax adjustments should not directly trigger criminal proceedings. However, depending on the relevant facts and circumstances, high tax adjustments could (theoretically) have an effect in a way that the relevant case can become (more) suspected.
To illustrate: according to publicly available guidance between the Tax Authorities and the Public Prosecution Service the following two main rules are followed:
- Scenario 1: The amount of a (potential) upwards tax adjustment amounts to € 100.000 or more with the presumption of intent. In such case, the Tax Authorities should inform the Public Prosecution Service about the case at hand.
- Scenario 2: The amount of a (potential) upwards tax adjustment amounts to less than € 100.000 with the presumption of intent and at least one of the 'additional criteria' are met (e.g., recidivist). In such case, the Tax Authorities should inform the Public Prosecution Service about the case at hand.
As mentioned under question 6, criminal tax offences can be divided between minor offences and serious offences. For tax offences, the main difference between minor offences and serious offences is that criminal intent is only a requirement to meet the definition of a serious offence (not for a minor offence). This essentially means that the absence of criminal intent does not mean that a criminal (tax) offence cannot be committed (for example in case of mere negligence).
In general, the spontaneous and correct filling of an amended tax return without the application of a self-disclosure program does not directly have impact on the initiation of criminal proceedings. However, the spontaneous and correct filing could have a penalty reducing effect. Note that the spontaneous and correct filing without the application of a self-disclosure program is only possible insofar the tax assessment is not irrevocable yet.
If the taxpayer (successfully) applies the self-disclosure program, the possibility of criminal proceedings should be eliminated. Therefore it is highly recommend to make use of the self-disclosure program if certain requirements are met (reference is made to Question 11).
The work of the Dutch Public Prosecution Service (in Dutch: het Openbaar Ministerie or the ''OM'') consists of the investigation and prosecution of criminal offences. A special team of the Public Prosecution Service is the Fiscal Intelligence and Investigation Service (in Dutch: Fiscale inlichtigen- en opsportingsdienst or the "FIOD"). The FIOD is appointed to and specialized in financial crimes such as tax fraud.
In general, the public prosecutor (in Dutch: de officier van justitie or the "OvJ") is allowed to prosecute offences in criminal court. However, the Public Prosecution Service and/or Tax Authorities are also allowed to impose a fiscal penalty order (in Dutch: fiscale strafbeschikking) on their own initiative regarding certain criminal tax offences under certain circumstances. Note that in case of a fiscal penalty order it is not possible to impose imprisonment (only imposition of penalties, community service or compensation is possible).
Tax offences can be divided into minor offences (in Dutch: overtredingen) and serious offences (in Dutch: misdrijven). The main difference between minor offences and serious offences is that criminal intent is only a requirement in order to meet the definition of a serious offence.
Minor offences
The statute of limitation period for all minor offences amounts three years.
Serious offences
The statute of limitation period for serious offences relates to the penalty and maximum term of imprisonment.
- Imprisonment of a maximum of three years, detention or fines: statute of limitation period amounts six years.
- Imprisonment of a minimum of three years: statute of limitation period amounts twelve years.
- Imprisonment of a minimum of eight years: statute of limitation period amounts twenty years; and
- Imprisonment of a minimum of twelve years: no statute of limitation period applies.
For commission offences (i.e., committing a criminal conduct) the general rule is that the statute of limitation period starts to run if the relevant (criminal) action took place. Furthermore, it has been explicitly clarified that if the criminal conduct relates to intentionally filing an incorrect or incomplete tax return with the tax authorities, the statute of limitation period starts to run with the submission and the subsequent receipt of the tax return by the relevant tax authorities.
For omission offences (i.e., not meeting the required legal obligation), the statute of limitation period starts to generally run at the moment the violation of the tax obligation occurs.
The offence of tax fraud is categorized as a serious offence rather than a minor offence since the tax fraud requires intent at the level of the relevant taxpayer. Generally, tax fraud can emerge in three different ways. The accompanying criminal sentences (i.e. no administrative tax penalties) are divided into the following three categories:
Category 1
The first category relates to situations in which there is: (i) underpayment of tax due to the fact that (ii) the taxpayer intentionally commits one of the following conducts:
a) the taxpayer does not or does not timely submit its tax return with the tax authorities;
b) the taxpayer provides information, data or instructions incorrectly or incompletely with the tax authorities;
c) the taxpayer does not keep records in the legally required manner;
d) the taxpayer does not meet certain data storage requirements;
e) the taxpayer does not provide necessary cooperation to provide access to the records and help the relevant authorities to understand the records if requested; or
f) the taxpayer provides an incomplete invoice or bill.
In case of a serious offence in Category 1, the maximum sentence is:
- Four years of imprisonment; or
- The higher amount of: (i) € 22.500 or (ii) the amount of the unpaid tax.
Category 2
The second category relates to situations in which there is: (i) underpayment of tax due to the fact that (ii) the taxpayer intentionally commits one of the following conducts:
a) the taxpayer submits an incorrect or incomplete tax return with the tax authorities; or
b) the taxpayer is obligated to provide access to certain books, records or other data carriers and makes these available in false or falsified form.
In case of a serious offence in Category 2, the maximum sentence is:
- Six years of imprisonment; or
- The higher amount of: (i) € 900.000 or (ii) the amount of the unpaid tax or (ii) the triple amount of the underpaid tax insofar the incorrect or incomplete tax return relates personal income from savings and investments (in Dutch: inkomen uit sparen en beleggen).
Category 3
The third category relates to the situation in which the taxpayer does intentionally not, not fully or not timely meets its obligation to pay its tax claim.
In case of a serious offence in Category 3, the maximum sentence is:
- Six years of imprisonment; or
- The higher amount of: (i) € 90.000 or (ii) the amount of the unpaid tax.
Dutch criminal tax law vs Dutch general criminal law
Bear in mind that in addition to the above, the criminal offences as included in Dutch criminal tax law could have a connection with criminal offences as included in Dutch regular criminal law (e.g., money laundering, forgery, participation in a criminal organisation etc.). It should be determined based on a case-by-case basis whether any Dutch regular criminal law could also apply.
In general, a company and its directors are required to act with diligence and care in handling and organizing its corporate and business affairs. In case it is not required by law to have a compliance or risk mitigation program in place, having one in place will not, in principle, mitigate criminal liability. However, in Dutch criminal law, all facts and circumstances of the case, and (prior) actions and behaviour(s) of the accused are considered in order to mitigate or aggravate criminal liability.
In case a compliance or risk mitigation program is required by law, not having one in place constitutes an omission offense.
In the Netherlands it is possible to apply for a self-disclosure program in case the relevant tax return has become irrevocable. If the tax return has not become irrevocable yet, it is still possible to correct the tax return spontaneously (i.e., without the application of the self-disclosure program). The self-disclosure program provides the relevant taxpayer the opportunity to correct or complete its tax position. The taxpayer should submit a (straight forward) application form with the tax authorities.
It is important to realize that the taxpayer can only make use of the self-disclosure program when the taxpayer does not know or suspect that the tax authorities are or will become aware of the incorrect or incomplete tax position. Note that as of 2020, the self-disclosure program is no longer applicable for personal income from savings and investments (in Dutch: inkomen uit sparen en beleggen) and personal income deriving from a substantial interest (in Dutch: inkomen uit aanmerkelijk belang).
1 A taxpayer can still inform the Dutch tax authorities pro-actively which might reduce possible penalties. The Dutch tax authorities is however not obligated to reduce any penalty they intend to impose as there is no official self-disclosure program for these items.
In the Netherlands there is no exemption from criminal liability in case of full payment of a tax assessment. The fact that the tax assessment is fully paid does not mean that the tax assessment was complete and/or correctly submitted.
In general, the tax authorities can make adjustments to tax years that are still open. With respect to years for which a final tax assessment has already been imposed, an adjustment can be made if certain requirements are met.
For instance, if a final tax assessment (Dutch corporate income tax or Dutch personal income tax) has been imposed, the tax authorities can still impose an adjustment to this final tax assessment if there is either: (a) a qualifying ''new fact'' or (b) if the taxpayer has acted in bad faith. The time period of imposing such additional tax assessment (in Dutch: navorderingsaanslag) is limited to five years after the relevant taxable year has ended. Note that this term is extended to a period of twelve years insofar the income relates to foreign income.
The prosecution of a tax offence is typically an event that enables the Tax Authorities to impose an additional tax assessment. However, the prosecution of a tax offence does not impact the statute of limitation of the Tax Authorities in a way that the five or twelve years' term to impose an additional tax assessment will be extended.
However, the statute of limitation period applicable to tax offences (reference is made to Question 7) will be suspended due to the prosecution of a tax offence.
Criminal prosecution does not negate an existing tax liability. If taxes are underpaid, they can still be assessed and collected even if criminal prosecution commences. The tax authorities cannot impose administrative sanctions (such as tax penalties) and criminal sanctions simultaneously on the same conduct (una via doctrine) (see question 3). However, the mere collection or assessment of underpaid taxes are not considered "administrative sanctions".
Yes, it is possible to reach a tax/criminal settlement with the relevant authorities.
The public prosecutor is free within its discretionary power to reach a settlement with a 'suspect'. His discretionary power is however subject, and therefore limited, by certain principles, such as, inter alia, the proportionality principle (in Dutch: evenredigheidsbeginsel) and the principle of subsidiarity (in Dutch: subsidiariteitsbeginsel).
Both natural persons (individuals) and legal persons (companies) can commit criminal offences. More specifically, both individuals and companies can be found criminally liable for (tax) criminal offences. Therefore, criminal charges could be filed against both an individual (responsible for the company's actions) as well as a company.
In order to charge a company, the essential question, in general, is whether the offence can be attributed to that company. In principle, this is the case if the serious offence or minor offence is committed in line with the business of the company, however, this will ultimately depend on the facts and circumstances of the case at hand.
Yes. In case employees and/or directors of the company are not resident in the Netherlands, such individuals can still be prosecuted. Although foreign employees and/or directors can in principle be held fully liable for the (tax) criminal offence committed, there are certain exceptions / exemptions.
Considering that the lack of payment is a serious offence, for which criminal intent of the individual is required, the individual is in principle liable for the amounts claimed in case the criminal charge has been filed against such individual.
We have seen an increase in criminal prosecution for a variety of financial crimes, including tax offenses. The majority of financial crimes prosecuted concerned money laundering offenses. The active prosecution and elimination of VAT & customs fraud (particularly the missing trader-fraud (In Dutch: carrousel fraude) are a priority of the Dutch tax authorities.