Abstract:
The Dutch Tax Agency (Belastingdienst), customs and welfare subsidy agencies have decided to abandon the previously promoted Microsoft 365 migration project and instead build localized infrastructure under their own control, and gradually introduce European open source software as an alternative. The decision comes from the latest explanation document submitted to parliament by the Dutch State Secretary for Finance Eelco Eerenberg.
According to the plan, relevant agencies will take the lead in migrating email and schedule management systems to local environments in 2027, and the servers will be deployed on infrastructure owned or fully controlled by the tax department. Subsequently, from 2027 to 2028, personal file storage, collaborative office and other functions will gradually be taken over by European open source solutions. Officials stated that this route is in line with previous recommendations made by the Dutch ICT Assessment Advisory Committee, which is to avoid completely binding key businesses to a single supplier, but to find suitable alternatives for different functions.
The Dutch tax authorities are able to reconsider local deployment options, which is related to their expansion of data center capabilities in recent years. With increased infrastructure resources, the agency is equipped to host more local services. At the same time, existing software licenses will continue to be used wherever possible to reduce additional investment costs.
However, this adjustment does not come without costs. Some file management and information governance functions originally included in the Microsoft 365 ecosystem currently have no direct corresponding replacement capabilities in the local deployment solution. The Dutch Finance Department stated that it will further explain relevant issues and solutions in subsequent progress reports.
Digital autonomy also affects other modernization projects in the tax system. In the process of upgrading the VAT system, the Dutch tax authorities are gradually taking over managed services that were originally the responsibility of external providers. It has been previously reported that some of the agency’s value-added tax-related systems are highly dependent on U.S. suppliers and operating systems. In order to achieve a higher degree of autonomy and control, the new solution requires additional technical adjustments and migration work, so the project schedule is also affected. The launch of the VAT-refund system has been postponed to April 2027, while the deployment of the domestic value-added tax system has been postponed from the original July 2027 to the third quarter of that year.
From the perspective of resource allocation, currently about 55% of the information capabilities of the Dutch tax department are used for the modernization of key systems, 40% is used to meet laws, regulations and external requirements, and only 5% of the resources can actually be invested in strategic innovation. Officials believe that this situation stems from insufficient investment in system modernization and life cycle management over the past many years. It was not until 2023 that the relevant strategies changed.
According to current planning, the Dutch tax department is expected to usher in an important turning point at the end of 2028. By then, the proportion of resources used for basic modernization is expected to drop to less than 20%, while the proportion of strategic innovation projects will increase to more than 20%. However, the government also emphasized that this does not mean that all plans can be advanced simultaneously, because there is still a large backlog of projects to be implemented in many business chains.
For the innovative resources released in the future, the Dutch finance department has listed several key directions, including redesigning and automating the tax objection appeal process to cope with the business growth brought about by generative artificial intelligence making it easier for the public to submit appeals; continuing to eliminate and replace old systems to avoid forced emergency upgrades of equipment and software when they are close to failure; and building common infrastructure such as unified data management and document archiving platforms to further enhance the government's digital capabilities.
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