Tax office to correct 2.6 million Box 3 asset tax assessments

The Dutch tax office will begin sending letters to millions of people affected by incorrect asset tax assessments next week, marking the start of long-awaited financial redress after years of legal and political debate.

This week senators approved new legislation aimed at making the asset tax system fairer and more accurate and that means around 2.6 million tax assessments from the years 2021 to 2024 will now be reviewed.

People who overpaid tax on their savings and investments will be invited to submit their actual returns via an online form but should wait for a letter from the tax office before taking action.

The move comes after a 2021 ruling by the Dutch Supreme Court, which found that taxing people based on fictive rather than actual returns was unlawful. A revised system was also thrown out by the courts in June last year.

The new system, approved by senators, is based on actual returns.

The first letters, covering the 2022 tax year, will be sent from next week, starting with people who had already filed objections. The rest of the 10 million letters will follow in phases over the coming years, with the final batch expected in 2028.

Taxpayers will have 12 weeks to respond, or 26 weeks if their tax adviser handles the submission.

According to tax advisors, people who invested in property are unlikely to benefit. This is because the new law uses actual returns based on increases in a property’s official value and gross rental income, without allowing deductions for costs.

“That pushes the return above the tax office’s benchmark in most years,” Arjan Knol of the Register of Tax Advisers told the Telegraaf. The only exception may be 2022, when house prices fell.

Landlord lobby group Vastgoed Belang is preparing a court case, arguing the system is unfair. “Many private landlords pay more tax in Box 3 than they earn in rent,” chairman Niek Verra told the Telegraaf. “We believe the courts may reach a different conclusion if it’s challenged again.”