Dutch tax office to send letters about asset tax refunds starting this week

The tax and customs office in the Netherlands, the Belastingdienst, will begin sending out some 2.6 million letters to people with larger assets and higher wealth who can likely count on receiving compensation. People will receive restitution if they had to pay tax on the Box 3 section of their income tax return for fictitious capital capital gains on assets which they likely did not achieve. It will cost the treasury billions of euros to pay the mandatory compensation.

For years, tax was levied on earnings generated by the capital people held based on a fixed, fictitious rate of return. But many with cash savings did not earn even close to that rate of return, because the interest rate on savings accounts was much lower than the returns that earned from other investments, like stock holdings.

That system was unlawful, the Supreme Court recently ruled. It came with an important legal decision in which it was also stated that many victims are entitled to legal redress. As a result, the Belastingdienst is on the eve of a huge operation to pay back the amount that was unlawfully collected.

The letters, which will begin to go out on Tuesday, will not yet provide instruction about how to claim the compensation which they are owed. The people who are now receiving a letter will receive an invitation in the summer to provide more information per tax year. In the form that they will have to fill out and submit, they will be able to state the actual return achieved during those years. The amount of unfairly paid tax which they may get back will then be calculated.

Some 150,000 people who receive a letter will also have to take action right away, and submit a request. These are people whose assessments for 2019 have not yet been fully determined.

The restitution ruling from June also will lead to a delay in upgrading the information technology systems within the Belastingdienst. The recovery operation requires a great deal of working hours, and is placing a heavy burden on the tax office's ICT capacity. As a result, there will only be "some space" for new, far-reaching plans from 2029 onwards, according to advice from civil servants at the Ministry of Finance.

The tax office wants to replace the outdated software based on Cool:Gen, which is used for tax assessments. Use of systems using that language was supposed to be phased out by the end of 2026, but that will now be pushed back the end of 2027 due to the Supreme Court rulings.

It was previously announced that the Belastingdienst would not be able to introduce the new form of the Box 3 asset tax in 2027 as a result of the rulings.