In its judgment, the court points to the high tax interest rate that applied to corporate income tax in 2021, compared to other tax resources, such as income tax, for which only 4 percent tax interest was calculated. This rate has even increased further to 10 percent in 2024, which has given rise to strong criticism. The court ruled that the amount of interest violates the principle of proportionality and set it at 4 percent for the 2021 assessment.
If you have received a final corporate income tax assessment for the years 2021, 2022 or 2023 with tax interest, you can object to the high interest rate. The objection must be submitted within six weeks of the date of the assessment.
Then you can also apply for an (extra) provisional assessment. It is not possible to object to the tax interest on a provisional assessment, but you can, after receiving the provisional assessment, submit a request for reduction with reference to the judgment of the District Court of Noord-Nederland. If that request is rejected, an objection may then be lodged against that rejection.
It is expected that the Tax and Customs Administration will lodge an appeal with the Court of Appeal, or that an appeal in cassation will be lodged, so that the Supreme Court can immediately issue a judgment. Only after the Supreme Court has ruled will it be definitively clear whether the tax interest rate of 8 percent is indeed disproportionately high and may have to be lowered to 4 percent. However, this process can still take more than a year.
The Tax and Customs Administration does not charge tax interest if your income or corporation tax return is filed in time after the end of the (financial) year and the assessment is determined without any changes (in accordance with the tax return).
You can also limit or avoid tax interest by applying for a provisional assessment during the (financial) year. This is where you report the expected profit or income for the current year. The Tax and Customs Administration usually imposes a (revised) provisional assessment within 6 to 8 weeks.
If your estimate turns out to be correct (or even on the high side), no tax interest is due. However, if the provisional assessment is lower than the final profit, you will pay tax interest on the difference.
Are you planning a discussion and do you want to avoid paying unnecessary tax interest? Then apply for a timely (additional) provisional assessment for the amount you expect a discussion about.
Do you need advice on tax returns and assessments? Our advisors are ready to help you! For more information on tax interest, see our alert from 18 March 2024.
