Horizontal Monitoring Dutch Tax and Customs Administration

Horizontaal Toezicht

Horizontal monitoring offers large companies, but also small and medium‑sized enterprises, their financial advisors and the Dutch Tax and Customs Administration the opportunity to make agreements in advance about tax issues and the filing of tax returns, thus giving companies more certainty about their tax position, while at the same time improving the quality of tax returns and ensuring that double taxation is avoided. 

Last year the Dutch Tax and Customs Administration was busy further refining Horizontal Monitoring with as result changes that have implications for (the cooperation between) companies, their advisors and the Dutch Tax and Customs Administration. Whereas in the past the emphasis was on cooperation with the Dutch Tax and Customs Administration, under the new setup the focus has shifted to the specifics of the monitoring itself.

Horizontal Monitoring Dutch Tax and Customs Administration

Horizontal Monitoring will continue to see reticence on the part of the Dutch Tax and Customs Administration in taking action to audit companies. However under the new setup it will expect you to perform audits yourself and share the results with them. In exchange for this, you will periodically consult with the Dutch Tax and Customs Administration to discuss the results of those audits and any other topical matters.

The Dutch Tax and Customs Administration therefore expects more from you than was previously the case. Do you (still) want to participate in Horizontal Monitoring and, if so, how are you going to structure this?

Tax Control Framework

If you’re going to participate in the new Horizontal Monitoring, the Dutch Tax and Customs Administration will expect you to perform audits in the form of self-assessments, internal monitoring and random (statistical) sampling. Before starting with this, it’s important to ensure that all your tax processes are running smoothly and to document this in a Tax Control Framework. Only then can you start to address whether audits can show that these processes are working as expected.

Tax processes are no different from other business processes. Meijburg & Co is therefore convinced that a Tax Control Framework – just as all other business processes – must be managed by the company itself. And the smooth running of a process is mainly dependent on effective communication between all those involved at the company. It’s therefore up to you.

Do you need advice on Horizontal Monitoring?

Meijburg & Co can advise you on how to set up a Tax Control Framework. We not only have the experience and technical expertise to perform audits in the form of random (statistical) sampling, but can, for example, also provide you with dashboards, which are a more interactive way to gain insight into the operation of your processes. If you’d like to know more about this please contact your designated tax advisor at Meijburg & Co or one of our specialists. We’d be happy to work together with you to address all your questions.

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