What is a tax return adjustment?
If you’re an entrepreneur, you will most likely have to file a turnover tax return, or VAT return. So you do your best to keep your business administration as accurate as possible. But it’s always possible to overlook a receipt or invoice. If you discover something that you should’ve declared but accidentally didn’t, you need to correct the initial declaration. This is done by filing a tax return adjustment.
When to use a tax return adjustment?
When you’ve paid too little or too much VAT, the Dutch Tax and Customs Administration wants you to correct this. You’re obliged to do so if a mistake was made in a VAT return of the past 5 years. If you don’t correct it, the tax authorities can impose a fine. You can file a tax return adjustment for turnover tax using the declaration portal of Mijn Belastingdienst Zakelijk. You can adjust either a specific period or an entire tax year. But how do you choose between those 2 options?
Tax return adjustment over a specific period
Being the good entrepreneur that you are, you submitted your VAT return for Q1 before the deadline. But a few days later, you discover that you forgot to include an invoice you sent out; meaning that you’ve paid too little VAT in Q1. In this case, you fill in the period to which the adjustment pertains and the correct amounts on your tax return adjustment. The adjustment form looks the same as the form for filing a VAT return. Make sure you fill in all the boxes as the tax return adjustment will replace the original VAT return.
Tax return adjustment over an entire year
Every quarter, you’ve neatly submitted everything in the correct time period. However, when the annual accounts are drawn up there appears to be a difference. This doesn’t mean you have to go through every separate period to find the error and submit a tax return adjustment over that period. Instead, you submit a tax return adjustment with the correct amounts for the entire financial year.
Correcting without tax return adjustment
Should you come across a number of receipts or invoices of small amounts in the following quarter, that you’ve forgotten to file and with a difference of less than €1,000 compared to the submitted declaration, then the Dutch Tax and Customs Administration allows you to amend this in the following period. It is therefore not necessary to submit a tax return adjustment, but you include the amounts in the next VAT return.
Additional tax assessment and interest
If you’ve paid too little turnover tax and submit a tax return adjustment, you’ll receive an additional assessment from the tax authorities. Interest will probably also be charged on the amount to be paid. You don’t have to pay this interest if you submit the turnover tax supplement within 3 months after the end of the year. It’s therefore important to submit a tax return adjustment as soon as you discover an error.
Do you have a bookkeeper? Then he or she will of course take care of the handling of the tax return adjustment for you. In that case it’s not necessary to do this yourself.