Tax authorities are struggling with outdated systems, and that complicates VAT reduction

The Tax Authorities VAT systems cannot be modernized before 2026 and possibly even later. Thats what officials from the Ministry of Finance and the Tax Authorities said in a hearing against the House of Representatives.

That makes it difficult to live up to the promise from the coalition agreement to reduce VAT on fruit and vegetables. It is not impossible, but it means a lot of extra work for the Tax Authorities anyway.

Making choices

The VAT tax runs on systems at the Tax Authorities with the largest technical backlog. Changes to the VAT rules therefore mean double work, according to officials. Changes must be made to the old system first and then again when creating the new system.

And not only changes to VAT lead to problems. Turnover taxes, car taxes, income tax, payroll tax and corporate taxes also partly run on old systems. According to the officials, they run into dilemmas and choices are inevitable.

They therefore hope that MPs will get more eye for consequences for their computer systems when changing tax laws and regulations.

Big ambitions

The officials also point out that modern systems are more agile. That makes changes a lot easier.

As an example, it was mentioned abolishing the jubelton (the tax-free donation of 100,000 euros for the purchase of a house). This can be adjusted within two years, because the yard and pouring load runs on a modern system.

While the Tax Authorities are running on outdated systems, there are โ€œmajor challengesโ€ for the service: the recovery operation childcare allowance, the investigations into the so-called blacklist and the repair of the unlawful savings tax in box 3.

On top of that, come the big ambitions that the Rutte IV cabinet has expressed. In addition to abolishing VAT on fruit and vegetables and abolishing the jubelton, it is examined whether in the long term the payment system can be retreated. And major changes in the field of car tax have been announced.