Dutch Action Plan Targets Tax Evaders, Enablers

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By Linda A. Thompson

The Dutch deputy finance minister is abolishing the country’s tax amnesty scheme and removing legal barriers to identifying tax fraud and recovering tax debts.

In a 13-page letter, published Jan. 17, Deputy Finance Minister Eric Wiebes unveiled his action plan to combat and prevent international tax evasion schemes, which he described as “unacceptable,” outlining a handful of measures likely to affect both resident taxpayers and tax advisers.

Among the most high-profile measures is a law proposal, to be unveiled before the end of the year, that would make it possible to publicly disclose the identities of intermediaries who have received fines for aiding or abetting tax evasion by Dutch residents.

The state secretary of finance also announced he would propose scrapping the country’s voluntary disclosure program, which permitted lower fines for taxpayers who alerted Dutch tax authorities that they filed an incorrect or incomplete tax return within two years after submission.

Removing this measure will subject repentant taxpayers to the same treatment as those who alert tax authorities only after two years, and thus be eligible for fines up to 120 percent of the sum of taxes owed.

Lawyer Privilege

In addition, Wiebes announced his intention to limit lawyers and notaries’ privilege of non-disclosure to particular forms of legal assistance in a new legislative proposal.

Noting that the privilege of non-disclosure appears to be applied more broadly in tax cases in the Netherlands than provided for under international standards on transparency and exchange of tax information, Wiebes said his aim was to “prevent particular facts, business acts and transactions with fiscal relevancy from being concealed from the view of the Tax Administration by using someone who is bound by confidentiality.”

Wiebes is also set to propose making it easier for local tax authorities to hold heirs and foreign legal persons liable for the payment of Dutch residents’ tax debts.

Legal Protection

Frank Herreveld, a spokesperson for the Dutch Association of Tax Advisers, qualified the impact of the proposed measure to disclose the identities of tax advisers who have received fines, noting that such fines were only very rarely awarded to his knowledge.

“I think the aim of this announcement is to push tax advisers to be even more cautious because it’s not just a fine anymore, but also the disclosure of this fine,” he told Bloomberg BNA in a Jan. 19 phone interview.

Still, he warned about the legal protection dangers such disclosures would entail, noting that the presumption of innocence should continue to apply.

“As the Dutch Association of Tax Advisers, we have a lot of appreciation for the fact that he wants to aggressively combat tax evasion,” he said, referring to the Dutch Deputy Minister of Finance.

“We also completely agree with this, but you also have to continue taking into account the judicial protection everyone is entitled to.”

‘Medieval’ Practices

Arjo van Eijsden, tax partner and head of the Dutch tax litigation group at EY in Rotterdam, told Bloomberg BNA that the “proportionality” of the proposed measures was disconcerting. Although he welcomed the anti-tax evasion measures on principle, public disclosure of the identities of tax advisers smacked of “medieval,” punitive practices, he said in a Jan. 19 phone interview.

“Of course, you have to punish facilitators and intermediaries who have helped their clients evade taxes, but do not publish their names—that’s absolutely taking many steps backwards.”

Van Eijsden also warned about the compatibility of the proposed plan to abolish the voluntary disclosure scheme with the European Convention on Human Rights. Under this convention, he said, “it’s not possible to levy higher tax penalties with retroactive effect, so it remains to be seen whether what the State Secretary of Finance has now announced is possible.”

The Netherlands is holding general elections this March. Any pending legislation could be declared “controversial” by the Senate after the cabinet has resigned, with the legislative process halted until a new government has been formed.

To contact the reporter on this story: Linda A. Thompson in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

For More Information

The deputy finance minister's letter is at: http://src.bna.com/lyw

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