Box 3: restoration of rights and bridging legislation | Deloitte Netherlands


Box 3: restoration of rights and bridging legislation

The State Secretary for Finance informed the House of Representatives how restoration of rights will be offered to participants in the mass objection proceedings against box 3 tax levied in 2017-2020, and announced bridging legislation.

11 May 2022

Christmas judgment

On 24 December 2021, the Supreme Court ruled that the manner in which the box 3 levy has been structured since 2017 violates both the prohibition on discrimination (Art. 14 ECHR) and the right to peaceful enjoyment of possessions (Art. 1 Protocol No. 1 ECHR). By way of restoration of rights, the Supreme Court reduced the 2017 and 2018 income tax assessments (the years at issue in the proceedings) by only taxing the actual return realised. In general, the Supreme Court refrains from prescribing how restoration of rights is to be provided, and only stipulates that the compensation should be determined in accordance with the standards of reasonableness.

Collective decision on objection

Following this so-called Christmas judgment, on 4 February 2022 the Tax Inspector issued a collective decision on the objections raised in the mass objection proceedings against the box 3 levies for the years 2017 through 2020. However, it remained unclear how restoration of rights would take shape and which taxpayers would qualify for it. On 28 April 2022, the State Secretary for Finance provided more clarity on this in a letter to the House of Representatives.

Starting points for restoration of rights

The government’s starting point is that compensation will be offered to taxpayers who participated in the mass objection proceedings, and to taxpayers whose income tax assessment(s) for the years 2017, 2018, 2019 or 2020, or for one or several of these years, had not been irrevocably established on 24 December 2021. The decision whether other taxpayers should also be offered (ex officio) compensation for the aforementioned years was postponed until the Supreme Court had ruled on this issue, which it did on 20 May 2022. In short, the Supreme Court ruled that the Christmas judgment qualifies as new case law and the Tax Inspector can thus not be obliged to grant automatic reduction of an income tax assessment with box 3 income that had already been irrevocably determined at the time the Christmas judgment was rendered. This is only different if the Minister of Finance uses his power to make an exception in the event of new case law, which has not yet happened. It remains to be seen whether the Minister will make an exception for these cases.

Calculation of compensation

The government will use the so-called flat-rate savings option to calculate the compensation payable: the amount is still based on a flat-rate yield, but based on the actual composition of the assets (broken down into savings, investments and debts). See the table below:

Flat-rate savings option
2017 2018 2019 2020 2021
Savings 0,25% 0,12% 0,08% 0,04% 0,01%
Debts 3,43% 3,20% 3,00% 2,74% 2,46%
Investments 5,39% 5,38% 5,59% 5,28% 5,69%


The return on savings is calculated using the average interest rate on savings in the year in question. For debts, it is the average interest rate on outstanding mortgage debts. The flat-rate return in the category investments has remained unchanged. The government believes that it would be unfair to compensate investors for bad investment years, while they have achieved a return that is equal to or higher than the flat-rate return over a longer period of time.
The advantage of this flat-rate approach is that taxpayers who are eligible for compensation do not have to do anything. The tax authorities will recalculate the income tax assessments for the years 2017 through 2020 themselves using the data in the returns regarding the composition of the assets and the flat-rate return rates in the table above. Participants in the mass objection proceedings will be informed whether they are eligible for a refund before 4 August 2022 (no later than six months after publication of the collective decision on the objection). Other taxpayers whose assessments for the years 2017-2020, or for one or several of these years, had not yet been irrevocably determined on 24 December 2021, will follow later this year.

On 20 May 2022, the Supreme Court ruled that participants in the mass objection proceedings who disagree with the amount of compensation awarded can submit a request for ex officio reduction to the Tax Inspector. The rationale is that reduction of an assessment resulting from a collective decision on an objection is not subject to direct appeal to the courts. Since this case concerns the levy of income tax, the Tax Inspector must decide on the request by means of a decision that is open to objection, so that a legal remedy still exists. After the Tax Inspector has ruled on the objection and the taxpayer has lodged an appeal against this decision, the Tax Court can assess whether the compensation awarded is reasonable and, if necessary, determine the amount itself.

Bridging legislation

The flat-rate savings option, based on the actual composition of taxpayers' assets and the revised flat-rate table of returns, will also be used to determine the box 3 income in the income tax assessments for the years 2021 and 2022. At least, if this results in a lower tax assessment.

Bridging legislation will be introduced for the years 2023 and 2024, which will also be based on the flat-rate savings option. A bill to this effect will be submitted to the House of Representatives on Budget Day.

Taxation based on actual return

As of the tax year 2025, an entirely new box 3 taxation method will be introduced. The State Secretary outlined the principles of this new regime in the Outline policy memorandum on box 3 taxation (Contourennota box 3-heffing), which was sent to the House of Representatives on 15 April 2022. The starting point will be a levy based on actual return (capital gains tax). For more information, please refer to an earlier news item on this subject.


Did you find this useful?