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Adjustment of additional tax assessment period from five to three years in the absence of intent (Tax Plan 2024)

On Budget Day 2023, the Dutch outgoing government presented the 2024 Tax Plan to the House of Representatives. The Plan announced that the sanctions system in the Dutch General Customs Act (‘Algemene douanewet’) will be adjusted. In short, this means that, as of 1 July 2024, the unintentional filing of an incorrect customs declaration or the unintentional failure to (correctly) provide information, data or instructions, will result in an administrative fine for omissions and neglect. This will provide greater clarity regarding the application of the three-year vs. five-year period for additional tax assessments by customs authorities.

Based on current national legislation, the Dutch customs authorities have long been making additional assessments of import duties based on a five-year period. The regular additional tax assessment period of three years, as provided for in the Union Customs Code (UCC), is rarely if ever applied. This results in an undesirable situation once additional tax assessments are made, while there have been no intentional mistakes in the filing of the declaration or in the provision of information to customs authorities.

Up until Budget Day, the customs authorities stood their ground and remained of the opinion that every unintentional filing of an incorrect customs declaration, constitutes a criminal offence under current regulations, and would therefore permit the application of the five-year period for additional tax assessments. Now, they seem to have abandoned this position.

On 19 September 2023, the first step has been taken in reviewing the entire current customs sanctions system. As a result of this review, there may be a shift from criminal to administrative enforcement. The unintentional filing of an incorrect customs declaration will in the future be corrected again under administrative law, with an administrative fine. Details will follow.

The adjustment will only be implemented as of 1 July 2024. However, the measures are provided with so-called transitory law. Criminal offences that occurred before 1 July 2021 (and therefore outside of the three-year period), will remain subject to the current  – i.e., until 30 June 2024 applicable – regime of criminal law and criminal prosecution. Declarations or acts made on or after 1 July 2021, will no longer constitute an act liable to criminal prosecution, and will be subject to the new criteria, as far as no intent is involved.

Due to this adjustment, the regular additional tax assessment period will be reduced to three years. Once again, this requires the unintentional filing of an incorrect customs declaration or the unintentional failure to (correctly) provide information, data or instructions.

A positive development. Disappointing however are the transitional measures. In the first place, because the Dutch corporate sector will remain subject to incorrect additional assessments of import duties. Secondly, the 2024 Tax Plan reveals the true reason behind this shortcoming: the customs / tax authorities cannot handle this adjustment process-wise. We wonder what the Dutch Court will think of this

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