The faltering introduction of a new wealth tax is creating an ever-increasing hole in the government’s budget. The new box 3 tax should be introduced in 2025, but that has now been postponed to 2027. The costs of the delay run up to 780 million euros.
The spring memorandum, which was sent to the House of Representatives last week, contains another major setback for State Secretary Marnix van Rij (Finance). His tax authorities are missing 395 million euros due to the delayed introduction of a new wealth tax.
That new tax, which should include a fairer tax on the return that people actually earn on savings and investments, had previously been postponed by a year to January 1, 2026. That delay cost 385 million euros. Now that Van Rij is postponing the introduction by another year, to 1 January 2027, the costs will rise to 780 million euros.
The spring memorandum states that ‘this loss is covered within the box 3 domain’. That probably means that capital gains tax will go up. In August, the cabinet will decide exactly how the gap will be closed and who will pay for it.
ICT systems
The introduction of a fair capital tax is still delayed due to complicated new legislation and rattling ICT systems at the Tax and Customs Administration. “The delay is inevitable and must be covered,” said Van Rij.
The delay in the introduction of the new capital tax – from 2025 to 2027 – results in a cost item of a total of 780 million euros. It looks like taxpayers in box 3 will have to pay for this. Later this year, the cabinet will decide exactly where the bill will end up.
The delay is the result of chaos at the Tax and Customs Administration. For example, it takes more time to update the ICT systems of the tax authorities. In addition, the Tax and Customs Administration has its hands full compensating savers after the Supreme Court torpedoed the capital tax at the end of 2021. The old tax was largely based on a notional return. As a result, savers paid too much tax for years.
Efficiency
With the new box 3 tax, the actual return on savings and investments must be taxed. But the introduction of the new tax law will require much more effort than the cabinet had previously thought, says Van Rij. According to the State Secretary, during the formation of the current cabinet, no proper thought was given to what exactly a ‘fair tax’ means. “If I then ask: have you discussed what a real return is, then the answer is: no, not at all,” Van Rij complained earlier.
In a letter to the House of Representatives, Van Rij states that ‘broad support is needed’ for the new capital tax. “Currently, opinions differ on how the actual return can be taxed,” he still notes. A parliamentary debate on the issue is scheduled for May 9.
Pay
The delay does not mean that people do not have to pay tax on their savings interest or stock market returns until 2027. Almost three million Dutch people now pay tax in box 3 through a temporary bridging scheme. In this scheme, the tax on savings is lower than before, while the return on investments is assessed higher.
This temporary arrangement is also controversial. There are so many objections – already half a million – that the Tax and Customs Administration cannot handle it, and certainly not within the statutory period. Investors in particular are complaining. The tax authorities assume that all investors achieved a positive return of 5.5 percent in 2022. According to the Association of Effectenbezitters, that percentage is far too rosy.