Horizontal Monitoring (Horizontaal Toezicht)

‘Horizontal monitoring’ is a type of cooperation between the Dutch Tax and Customs Administration, DRV and our client. Such cooperation is based on transparency, honesty and trust. The Tax and Customs Administration assesses returns prepared by us as ‘acceptable’. Because this stamp has been placed on the return and the Tax and Customs Administration does not audit it (subsequently or otherwise), the return is processed in an accelerated manner.

 

Horizontal Monitoring Agreement (Convenant Horizontaal Toezicht)

Since 2012, DRV has had a Horizontal Monitoring Agreement with the Tax and Customs Administration. Instead of subsequently auditing each individual return, the Tax and Customs Administration has positively assessed our systems and procedures beforehand, and we are able to consistently deliver high quality returns. The Tax and Customs Administration thus deems subsequent auditing unnecessary. The Tax and Customs Administration continues, though, to also audit clients falling under horizontal monitoring on a random basis.

In practice, this mode of cooperation entails that we consult with the Tax and Customs Administration about a tax position taken in the return beforehand and not afterwards. The advantage is that the position is assessed based on the information and circumstances known now. In the current situation, in which consultation occurs afterwards, the Tax and Customs Administration’s views may change over time, so that a position may be regarded differently later on. Horizontal monitoring avoids this situation.

The conditions for the cooperation between, you, us and the Tax and Customs Administration are set forth in the ‘Horizontal Monitoring Guidelines’.

 

Advantages of horizontal monitoring

Horizontal monitoring is advantageous to you in several ways. The most important advantages are listed below.

  • Because your return is stamped by the Tax and Customs Administration as ‘acceptable’, it is processed much more quickly. You therefore gain clarity about your return earlier.
  • The Tax and Customs Administration only audits on a random basis, so there are fewer audits. If an audit turns out to be necessary, it is initiated and completed much faster.
  • The tax laws are subject to interpretation, and, together with you, we take positions for a settlement of the return which is as favourable as possible within the statutory limits and ethical norms. Under horizontal monitoring, we explain this position in advance if we believe that the Tax and Customs Administration could have a different opinion about this. The Tax and Customs Administration then assesses the position taken based on the current knowledge. Consequently, you know where you stand faster.
  • We have a fixed contact person at the Tax and Customs Administration. The communication is therefore much more direct and faster.
  • The Tax and Customs Administration lays down a definitive tax assessment quickly.
  • If you have payment problems, requests for payment arrangements will be dealt with and accepted more smoothly, and the collector can be contacted faster.

 

Participation in horizontal monitoring

It is up to you whether you want to participate in horizontal monitoring. If you want to participate, we will draw up a participant statement for you. In this statement, you will declare that you wish to enter into a relationship with us and the Tax and Customs Administration based on understanding, trust and transparency. Participation in horizontal monitoring imposes requirements for your accounting systems. We would be happy to help you determine whether your accounting systems are in proper shape. If you want to participate in horizontal monitoring or would like more information, please get in touch with your contact person at DRV.