Research

A first step to real-time taxation (2024)

What the report says

The report argues that real-time taxation is feasible and sets out how it could work for VAT. Its central design move is to stop treating the tax return as the moment of assurance and to start treating each transaction as the unit of assurance instead. Every invoice is signed and a compact reference to it is written to a shared, tamper-evident record, so the administration can check reported figures against that record without ever holding the full invoice.

The design is staged over three phases, which the report frames as logging, automating, and settling. In the first phase the system only records signed references, giving the administration a verifiable trail it can test its audit files against. In the second phase the VAT due on each transaction is calculated automatically and settled on the usual quarterly cycle through existing payment systems. In the third phase the VAT portion of a payment splits off at the moment of payment and settles in real time, with the net amount going to the business and the tax portion going straight to the administration.

Several principles run through all three phases. Each party keeps sovereignty over its own data and controls who may read which parts. Privacy is enforced so that any party granted access sees only what its role strictly requires, not the whole content of a transaction. The account-based version of the design routes payments through what the report calls a tax-splitter, which is the origin of the name later picked up by the OECD.

The report is candid about status. It presents a proof of concept being tested with market participants, including major Dutch accounting software and identity providers, ahead of a possible pilot cohort and a later launch. It is an R&D document, not an account of a system already in daily use.

Why it matters for real-time taxation

This is the report that turns the OECD vision into an authority-side architecture. It names the components an administration would actually need, an assurance record, automated VAT calculation, digital identity, and a settlement path, and it shows how they fit together without asking the taxpayer to change how they work. In the pilot, VAT splits off to the tax authority at the moment of payment and the rest goes to the business, with no separate filing, because the proof sits inside the transaction itself.

It also matters because it is citable. A journalist or policymaker who wants to verify that a European tax administration has seriously explored real-time VAT can read the primary document on government.nl rather than take a vendor's word for it.

Who wrote it

The report was produced by the real-time taxation working group of the Netherlands Tax Administration, led by innovation strategist Claire Arens, together with mintBlue. It was published on government.nl.

Citation

• Title: A first step to real-time taxation (with Management response)
• Publisher: Netherlands Tax Administration and mintBlue, published on government.nl
• Year: 2024
• Link: https://www.government.nl/documents/reports/2024/06/30/a-first-step-to-real-time-taxation

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