The Tax Authorities can bill for three different kinds of interest. With taxation up to 2011 you will have to deal with the tax interest. For more information click here. Starting from the tax year 2012, which enters into force the first of January 2013. The Tax authorities will now bill with a fixed interest rate instead of a variable interest rate. For more information about the tax interest click here . In addition to the tax interest, there is also a recovery interest. Read below about when you have to deal with recovery interest.
Paying recovery interest
Recovery interest is the interest that is taxed if you have not paid in time. Six weeks after the date of report is the deadline for the tax liability. In the case of an additional assessment (for example, when you are too late with your vat-declaration) the deadline is 14 days after the day of report of the tax assessment. A revised tax assessment can be recovered four weeks after the day of report of the tax assessment. The period over which the recovery interest is charged, starts from the first day of the aforementioned deadline until the day of payment. If the tax liability has partially been paid, the recovery interest is charged over the amount that has not been paid. In addition, in most situations a recovery interest is also charged over a period of granted extension.
Receiving recovery interest
If you have missed out on interest, because you have paid too much tax, you can receive a compensation for the recovery interest. Starting in 2013 the Tax Authorities will only compensate for the recovery interest if an amount that needs to be paid, has not been paid six week after the day of report. The recovery rate will not be paid if the person obligated to pay taxes is at fault for not receiving the amount that needs to be paid back by the Tax Authorities. For example, because a wrong bank account number has been submitted by the person obligated to pay taxes. Furthermore, you can be entitled for payment of recovery interest if you object or appeal against a taxation and extension of payment has been denied. If the objection or appeal does lead to a reduction of the taxation, then you are entitled to a recovery interest of the receivable amount. That interest charge period starts on the day after the final payment day of the taxation and ends six weeks after the date of reduction.
Level of the recovery rate
Similar to the taxation rate, both fixed and variable, the recovery rate is linked to the legal interest. Since the 1st of April 2014 a minimum percentage of 4% also applies. If you do not agree with the level of the recovery rate or if you have any questions, please do not hesitate to contact us.