Dutch Supreme Court: No Box 3 refunds for taxpayers who failed to file timely objections
People who failed to file a timely objection to the unlawful Box 3 tax levy will not receive a refund, the Supreme Court in The Hague ruled Thursday.
The Box 3 wealth tax is calculated by the tax authority based on assumed, or “fictitious,” returns rather than actual investment gains. The Supreme Court previously found aspects of this system unlawful for the years 2017–2020, saying taxpayers had in some cases been taxed on returns they did not actually earn.
That earlier ruling meant taxpayers who had filed objections on time were eligible for refunds or reductions. Some of those who missed the deadline also sought compensation, leading to four cases being filed with the Supreme Court. The court has now ruled in two of them.
In both cases, involving tax assessments from December 24, 2021, the taxpayers failed to object within the required deadline. The Supreme Court's decision affects all taxpayers who failed to object and later requested reductions.
If all of those individuals were entitled to compensation, it would cost the government several additional billions of euros. The court acknowledged that the ruling is "disappointing" for the taxpayers concerned.
The Supreme Court followed the recommendation of the Advocate General in making the decision. In May, the organization advised that taxpayers who did not file objections should not be compensated.
Separately, the decision comes amid ongoing political debate over reforming the Box 3 system. The current framework taxes wealth based on assumed returns, while planned reforms aim to move toward taxing actual investment gains. That would include more flexible treatment of losses and employee shares in start-ups and scale-ups.
State Secretary for Taxation Eelco Eerenberg said he is not providing cost estimates for the impact of the reforms, which could affect government revenues. The Netherlands currently raises about 9 billion euros annually from the Box 3 system, a level officials say they aim to maintain.
Eerenberg said questions over how any shortfalls will be covered are “the political discussion of the autumn.” Coalition parties VVD and CDA declined to say how they would pay for reforms. Opposition parties have suggested raising inheritance taxes or increasing the top rate of wealth taxation.
The Senate is expected to debate the reform legislation next week, though a parliamentary majority has not yet been secured.
