Tax office still working on asset tax reform, following court ruling


Last month’s high court ruling which said the way the tax on assets is calculated is illegal, is having a major impact on the tax office, which is ‘working flat out’ to sort out the implications, tax minister Marnix van Rij has told MPs

In addition, the tax office may have to return some of the tax it has levied on assets in the past, potentially costing the treasury billions of euros. Last year the asset tax generated €4.8bn.

The Supreme Court said at the end of November that the tax on assets included in box 3, such as savings and investments, conflicted with European human rights treaties.

At the moment all assets apart from own homes are placed in ‘box 3’ and taxed according to a fictional rate of income that the state believes these assets will be generating.

Currently the tax office presumes that people with €50,000 in assets have invested a third of it, and 79% of it if they have up to €1m. The asset tax is based on a fictional return of 0.03% on savings and 5.69% on investments.

The Supreme Court said the Dutch tax office was wrong to use a fictitious amount when calculating how much tax a couple had to pay on their savings, because it contravened the right to ownership and European human rights laws

The case dates back to 2017 and concerns a taxpayer with €1m in assets, of which 80% were held in a savings account, generating a low return.

Higher bill

He was taxed, not according to the actual return the savings generated, but according to a fictional mix, including just 21% in savings. This meant his tax bill was far higher than it should have been.

The court ruling focused on 2017, but means that the tax office must now revise asset tax demands in 2018, 2019 and 2020 as well – potentially paying back billions of euros.

It is not yet clear if the tax office will reassess the demands of everyone who paid asset tax, or just the estimated 100,000 people who have challenged the amount they were ordered to pay.

Van Rij said that decision had not yet been taken.

The tax office is currently sending out this year’s provisional assessments which do not yet reflect the new situation and will automatically be adjusted when the 2022 tax return is finalised, Van Rij said.

The new government had already committed itself to reforming the system.

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