The Tax and Customs Administration does not impose an assessment on people who have assets in box 3 ‘until further notice’. Due to a recent decision of the Supreme Court, the current system of taxation is no longer applicable, and the tax authorities cannot introduce a new, balanced system in the short term.
That is what State Secretary Marnix van Rij (Taxation, CDA) Written to the House of Representatives this Monday. The result of the measure is that for the time being no one will have to pay tax (or receive money back) on the balance of assets and liabilities in box 3. This includes income from savings and investments.
Budgetary implications
The judgment and the cessation of the levy have major budgetary consequences. Box 3 yielded 4.8 billion euros last year. The amount of lost income can increase due to compensation for wrongly levied savings tax over previous years. Not levying tax in box 3 can also provoke so-called arbitrage: it can be attractive for taxpayers to shift assets from box 1 (for example a repaid house) to box 3, temporarily or otherwise, in order to avoid tax in box 1.
Van Rij makes two exceptions to the provisional postponement of the tax in box 3. The first concerns the risk of limitation. This is the case if the limitation period of five years threatens to expire, as a result of which no assessment can be imposed at a later date. This applies, among other things, to assessments for 2017 and 2018. The second exception concerns the situation in which a taxpayer has an interest in the current way of levying tax. This applies, for example, to provisional assessments. Those for 2022 have already been completed in the regular manner, so that citizens can pay monthly or receive a refund on time. This prevents any payment problems. The exact amounts will be determined at the final assessment.
60,000 objectors
Taxpayers currently still pay tax on assets that exceed the exemption of EUR 50,650 per person based on a fictitious return. Savers often do not achieve that return – partly due to the low or even negative interest on savings – while the tax authorities do levy as if there were income. The Bond voor Belastingbeers then initiated a lawsuit on behalf of 60,000 objectors who had submitted a complaint about their box-3 assessment for 2017 and 2018.
The Supreme Court has previously ruled that this notional return may not serve as the basis for an attack. However, on 24 December, the Council also ruled that the regime in box 3 in force since 2017 is contrary to the European Convention on Human Rights (ECHR). As a result, citizens are entitled to reparation of rights.
Van Rij now writes to the House that he is not yet able to properly assess the scope of the judgment at the end of December. The question of whether not only the 60,000 objectors, but also other taxpayers in box 3 are entitled to recovery, therefore remains unanswered. The Ministry of Finance estimates the number of taxpayers who will have a positive income from box 3 in 2022 at approximately 2 million.
Nor is it clear what the system of taxation in box 3 should look like if the fictitious return is abandoned. Apart from the tax-technical discussion, this is also a complex operation in terms of implementation. The tax authorities are currently unable to handle this in terms of personnel or ICT, says Van Rij.
Real return
However, the State Secretary has announced that he will come up with a definitive solution more quickly. The coalition agreement of VVD, D66, CDA and ChristenUnie states that a new system would be introduced by 2025. Van Rij now wants to accelerate that.
Box 3 was introduced during the major tax reform in 2001. The system has been under fire for years and has been amended several times. Tax experts advocate replacing the fictitious return with a real return, with taxes being levied on the actual income or losses from capital.
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