Compensating savers who paid wealth tax in box 3 in recent years will cost between 2.4 and 11.7 billion euros. State Secretary Van Rij (Fiscality, CDA) announced this on Friday.
The ‘restoration of rights’, whereby savers and investors with assets in box 3 have to be compensated for their tax returns since 2017, will cost billions of euros in any case. This forces the cabinet to make “difficult choices”, said Van Rij during a press meeting.
At the end of last year, the Supreme Court canceled the so-called capital yield tax in box 3, because this tax is based on a fictitious return on income from savings and investments. According to the Supreme Court, this is illegal. Wealthy Dutch people who mainly kept their money in a savings account paid relatively much tax, while their actual return was virtually nil due to the low interest on savings. A group of more than 60,000 people successfully objected to the fictitious wealth tax.
Two options
Since then, the cabinet has been brooding on a solution to compensate the disadvantaged savers. On Friday morning, Van Rij presented the possible solutions that the cabinet now envisions.
According to the Secretary of State, there are two options. In the first, which the government calls the ‘savings variant’, people with savings are taxed on the basis of the current savings interest rate, which has been zero in recent years. Investments are based on a multi-year average return.
In the second option, the ‘fixed-rate variant’, the tax authorities use the average return per year for investments. In both cases, according to Van Rij, the tax paid is closer to the actual return achieved. The cabinet thinks that it does justice to the ruling of the Supreme Court.
Legal Restoration
Depending on the choices, the total costs for the restoration of rights can vary widely, says Van Rij. If only the group of 60,000 savers who objected are compensated and the tax authorities use the savings variant, the costs remain relatively limited. However, if the government compensates all more than 2 million Dutch citizens who have filed a tax return in box 3 in recent years using the fixed-rate variant, the costs will rise to almost 12 billion euros.
Van Rij did not want to make any statements about where that money should come from. Prime Minister Rutte said at the weekly press conference on Thursday that the cabinet will probably be obliged to increase taxes due to several setbacks.
The House of Representatives will debate the compensation of savers in box 3 from Tuesday.