Tax audits

Personal income tax audit

Are you a sole proprietor? In that case, you are subject to personal income tax. The tax authorities can check your accounts for up to 3 years after the tax year. If there is a suspicion of fraud, the term can be extended to 7 years.

What if the auditor requires additional explanations?

The tax authorities themselves will set material errors right (e.g. the incorrect addition of two amounts, double use, an error when transferring an amount). For other discrepancies, an auditor will ask you for additional explanations, maybe over the phone, in written form or by asking you to come to the tax office.

Which documents is an auditor entitled to remove from your premises?

The tax authorities may take all documents that are necessary to determine your taxable income. The auditor may also ask to copy digital data such as e-mails and stock lists. What the auditor cannot do is sit at your computer and sift through your files.

What if your tax return is wrong? 

If the auditor decides that your original return is incorrect, you have two alternatives:

• You conclude an agreement with the tax authorities and pay the additional tax amount due on your higher taxable income.
• If you do not reach an agreement, you have one month to put forward your arguments. And what if the tax authorities are still not convinced? In that case, you also risk administrative fines in addition to an increase in the taxable income (and the associated higher tax).

Good to know: If you exceed the term of one month, the tax authorities will proceed to an official assessment. This means that an auditor will determine your taxable income on the basis of the information he/she possesses.

Corporation tax audits

A company may also receive the visit of a tax auditor. The same terms apply as for the personal income tax: usually 3 years after the tax year and 7 years if the tax authorities suspect fraud.

What if the auditor requires additional explanations?

Just like with a sole proprietorship, the tax authorities themselves rectify material errors. Telephone and written questions for clarification purposes also follow the same process.

If the auditor pays the company a visit, it might be at the company’s tax residence (the location at which it actually operates) or at any other premises (professional or private) where the company’s accounting is performed.

Which documents is an auditor entitled to remove from your premises?

The tax authorities may take all documents that are necessary to determine the company’s taxable income: the accounting books, purchase invoices, purchase orders, pay slips, proof of the recovered costs, etc.

What if your tax return is wrong? 

Where the taxable income needs to be adjusted, the same procedure as for personal income tax applies.

VAT audits

The tax authorities have 3 years to check the VAT on a given year. If fraudulent intent is suspected, the term is extended to 7 years. The term starts on 31 December of the year in which the VAT became ‘due and payable’, i.e. when you gave someone an invoice.

For example: you issue an invoice to a supplier on 15 November 2018. The VAT administration can review your VAT return up to and including 31 December 2021.

Where and when does the audit take place?

In contrast to the tax audit, a VAT check is not announced. What if a VAT auditor pays your company a visit? If that happens, you must grant the auditor access to the spaces where you perform your economic activities (office, factory, workshop, garage, etc.) and that at any time.

If you use part of your home for your business, the auditor may also enter it. This is only possible between 5 am and 9 pm and with the permission of a magistrate.

Which documents is an auditor entitled to remove from your premises?

The VAT auditor may take all accounting documents that are useful for determining your VAT income. This also applies if you keep your accounting digitally. Your bank account statements are an exception: the VAT auditor needs a special authorisation to view them.

What if the auditor requires additional explanations?

The VAT auditor may ask anybody for explanations to check your VAT bookkeeping, both verbally or in writing. The auditor usually visits a company in person, but may also invite you to his/her office. However, you are not obliged to bring your bookkeeping along to that meeting.

What if your VAT return is wrong? 

If you have to pay more VAT, the VAT auditor draws up an additional VAT assessment. Consultations are possible at this stage. If you come to an agreement, you sign the additional VAT assessment and pay the additional VAT amount. 

If you do not agree with the additional VAT assessment, the VAT auditor will submit an official report, and the case will go to court, with all associated costs and any penalties.

Good to know: contact your accountant after a VAT audit. He or she knows your rights and obligations and will offer expert advice to help you.