The dispute revolves around the fictitious returns that the tax authorities used until 2017 when taxing savings and other assets in box 3 of the income tax.
In practice, this fictitious return is often higher than the actual return, which, according to the Supreme Court on Friday, is in violation of property rights and the prohibition of discrimination.
Low savings rate, low return
This case, part of a so-called mass objection procedure, concerned a couple with a joint capital of approximately one million euros. Interest rates were then, as now, historically low. As a result, the couple has been able to earn little from the savings.
However, the tax authorities state that people who have a lot of money also invest, so they get a return from it. The Supreme Court does not agree, and has now determined for the first time that the couple needs ‘reparation of rights’, which means that the tax authorities may only use the actual return for the years 2017 and 2018.
Countless other things
As a result, this also applies to all other taxpayers who have objected to their assessment in 2017 and 2018. That is why the tax inspector, with the ruling of the Supreme Court in hand, must make a decision in countless other cases that are tightened.
The Tax and Customs Administration speaks of a ‘judgment with a major impact.’ “We are going to see how we are going to carry out this judgment.” It is unclear how much the case will cost. “We cannot yet say how much less box 3 levy will have to be paid for the years 2017 and 2018, and what this means for the years after.”
It is also not yet clear whether people who have not objected to the wealth tax can also get money back.
The Bond voor Belastingbeers, which had initiated the mass objection procedure together with 60,000 co-claimants, is happy with the verdict. “Success. After years of litigation, the Supreme Court blows out the box 3 fairy tale. Tens of thousands of citizens can claim restoration of rights and reclaim their overpaid box 3 levy,” the union tweeted.
The coalition agreement also contains plans to introduce the new system of actual returns from 2025. To bridge the time in between, the tax-free allowance will be further increased to approximately 80,000 euros.