Not all Dutch taxpayers entitled to Box 3 wealth tax refunds

People who did not file timely objections to the Netherlands’ unlawful Box 3 wealth tax — which was based on fictional returns rather than actual earnings and caused many taxpayers to overpay — do not qualify for compensation, the advocate general has advised the Supreme Court.

The advocate general reviewed two of four pending cases aimed at deciding whether a broad compensation program should be extended beyond those who objected on time. The court, which frequently adopts the advocate general’s recommendations, is expected to rule at an unspecified future date.

In 2021, the Supreme Court declared the Box 3 levy unlawful for tax years 2017 through 2020. The tax was based on a fictional presumed return on savings, investments, and other assets rather than on actual earnings or capital gains.

Taxpayers who filed objections in time received compensation. Those who missed the deadline also demanded refunds, prompting the four test cases.

The two cases examined by the advocate general centered on whether a tax inspector from the Belastingdienst could reduce a finalized tax assessment. Such reductions are barred when the need for change stems from court rulings issued after the assessment was completed—including the Supreme Court’s 2021 decision on Box 3.

The advocate general ruled, consistent with earlier Supreme Court precedent, that this exception applies and that not every taxpayer is entitled to a refund.

The complainants argued they were still owed compensation under the principle of proportionality, which requires that any adverse effects of a regulation on citizens be proportional to the regulation’s purpose. The advocate general rejected that argument.

The government has already spent billions of euros compensating those who objected on time. Granting relief to non-objectors could involve more than 1 million additional people.