Temporary savings tax fix almost impossible to implement: Council of State

The Tax Authorities are struggling to implement a temporary scheme for tax on returns on assets (box 3). In an advisory report on the bill, the Council of State speaks of “an almost impossible task” and urged the government to take measures to relieve the pressure on the tax authorities.

In June last year, the Supreme Court ruled that the Tax Authority charged a large number of taxpayers too much tax in box 3 since 2017. The Tax Authorities still levied tax on an assumed return, while in practice, people earned much less on their investments. According to the judge, taxpayers should have been allowed to demonstrate this and thus receive a lower levy.

The government translated the Supreme Court’s ruling into a counter-evidence scheme. This should also ensure that tax can still be lawfully levied on box 3 in the coming years. The government is working on a new system in which tax is based on actual returns, but this has been delayed for years.

According to the Council of State, the Tax Authority “must make great efforts” in implementing the counter-evidence scheme, and “the risks of process disruptions are great.” The government must ask itself whether a fine-meshed scheme that approximates the actual return as accurately as possible “outweighs the great effort of people and resources needed to achieve this,” said the government’s most important advisor on legislation.

State Secretary Tjebbe van Oostenbruggen (Finance) is satisfied with the advice, a spokesperson said. He acknowledges that the counter-evidence scheme “requires a lot from the Tax Authority, but added that the tax office is already working on measures to ensure that the recovery operation runs smoothly. The service is recruiting additional staff and developing a form with which people can “declare their actual return in an automated and structured manner.”