Who pays income tax?
When the Tax Authorities request you to file an income tax return, it’s mandatory to comply. Failure to do so will prompt the Tax Authorities to estimate your income, often resulting in a higher assessment compared to your own filing. Additionally, you may incur a default penalty along with the tax owed.
Even if you haven’t received a notification but believe you owe taxes, it’s essential to proactively submit a tax return. This can be conveniently done through DigiD or with the assistance of your tax consultant.
When to file income tax?
If you’ve been contacted by the Tax Authorities, their message will specify the deadline for filing your tax return, typically before May 1 of the subsequent year. Payper can assist in requesting a deferral of up to 1 year on your behalf.
For those filing a tax return independently without receiving a notification, it must be completed within 5 years after the conclusion of the tax year.
Essential Information for Your Income Tax Return:.
*Annual accounts of your company
* Change in domestic situation (cohabitation, marriage, divorce, children, moving)
* Annual statements from employers and benefit agencies
* Premiums paid for disability insurance/annuities
* Annual statement of accrued pensions
* WOZ value of the owner-occupied home.
* Annual bank statement of mortgage loan
* Statement of paid leasehold (which may be deductible)
* Notary settlements related to property transactions
* Annual summaries of all assets and liabilities (e.g., bank accounts, securities, and capital insurance policies)
* Any other relevant information (consult your advisor or review previous tax returns for guidance)
Corporate tax return
Corporate Tax Services.
Corporate tax (CIT) is imposed on business profits. Entities such as BVs, NVs, and cooperatives are required to file corporate tax returns. Associations and foundations become liable for tax only if they engage in competitive entrepreneurial activities or pursue profits through business operations. Even non-profit foundations may be subject to corporate tax if they regularly generate operating surpluses.
Filing Deadlines
Corporate tax returns must be submitted digitally, typically before June 1 of the following calendar year. Utilizing an accounting firm grants an extension until May 1 of the subsequent year.
Important Note: The Chamber of Commerce mandates filing publication documents within 6 months after the calendar year’s end, with a deferment scheme distinct from the Tax Authorities’.
Integration of Financial Reporting
Annual accounts adhere to commercial standards, often aligned with tax regulations but with potential discrepancies. For instance, depreciation periods may differ between commercial and fiscal requirements. Although small, such differences necessitate adjustments when importing annual accounts into tax return software.
These annual accounts also form the basis for Chamber of Commerce reporting, which entails a condensed version of financial information. At Payper, our software seamlessly integrates these processes, including minutes from the AGM regarding profit appropriation. Given the complexity of corporate tax returns, professional consultation is recommended.
Tax Extra
Dividend Tax Management:
If you’re distributing dividends, commonly referred to as profit distributions, a dividend tax return is necessary. Dividends represent a portion of a company’s profit, typically a BV, distributed to shareholders. A formal decision by the General Meeting of Shareholders (AGM) is required to authorize a profit distribution, upon which dividend tax becomes applicable.
Tax Implications:
The company is obligated to withhold 15% dividend tax on the profit distribution, with recipients subject to an additional 11.9% in their income tax return (applicable to individual shareholders). This results in a total tax rate of 26.9%.
Filing Deadlines:
Dividend tax returns must be filed and paid within one month after the funds are made available. Failure to comply may result in additional tax assessments and fines. Even if you believe dividend tax is not owed, filing is mandatory if you receive a tax return form from the authorities.
Gift Tax and Inheritance Tax Services:
We also provide assistance with gift tax and inheritance tax returns. The amount owed depends on various factors, such as the relationship between donor and recipient, exemptions, and purpose of the donation. Our advisors can provide detailed guidance tailored to your circumstances.
Donations and Gift Tax:
Gift recipients may be subject to gift tax, depending on factors like the amount, recipient’s age, relationship to the donor, and purpose of the donation. There are exemptions, particularly for children, such as those used for education or purchasing a home. Reach out to us for personalized advice or to discuss a donation plan.
Inheritance and Inheritance Tax:
Inheriting assets may trigger inheritance tax, with the amount owed determined by the value of the inheritance and the relationship to the deceased. Various exemptions apply to partners, children, disabled children, parents, and others. The Tax Authorities will provide instructions on filing an inheritance tax return within four months of the deceased’s passing.
Business Succession Planning:
Inheriting or acquiring a business may incur gift or inheritance tax on its value. However, the business succession scheme offers tax relief for those continuing the business, provided certain conditions are met. Given the complexity of this arrangement, we recommend reaching out to our team for comprehensive support.