AG advises the Supreme Court on the consequences of the recent Box 3 judgment from the Supreme Court on pending cases

December dom box 3

The Supreme Court has in box 3 the judgment of 24. December 2021 decided on the amended fixed scheme in Box 3 for income tax on capital income (capital gains taxation), which has been in force since 2017. The Supreme Court ruled that this system – with the fiction of the assumed asset composition and the assumed return on savings and investments – is at system level in breach of property rights and the principle of equality enshrined in the European Convention on Human Rights (ECHR). ). According to the Supreme Court, it is no longer sufficient to establish the infringement or to investigate an individual excessive burden. The Supreme Court therefore sees reason to offer the interested party redress for the violation of his fundamental rights by stipulating that, in the case of the disputed years, only the return itself is included in the tax.

The case

In the present case, the interested party owns a box 3 capital of approx. € 600,000 in the years 2015 to 2018. In 2016, this was almost exclusively invested in savings, in the other three years, about half was invested in a holiday home. For each year, the fixed return is approx. € 6,000; according to the stakeholder’s claim, the actual return is much smaller, decreasing to zero in 2018. It is relevant to the decision in the case in question whether the stakeholder is entitled to remedy on the basis of the recent Box 3 judgment and, if so, for what years and for what amount.

The case is not one that is involved in the mass appeal procedure. The court’s rulings in this case precede the Box 3 judgment of 24. December 2021. This means that the court was not able to take into account the judgments of the Supreme Court from this judgment with regard to the contradiction of the capital gains tax per. system level from the year 2017 and the opportunity to offer redress in this connection. It is also doubtful whether the Supreme Court has ‘considered’ the December ruling in question, so that it would also for years before 2017 mean that the fixed tax for income from savings and investments at system level is in conflict with the ECHR.

Rådgivning AG

In its conclusion, AG arrives at the following results:

I. The judgment of 24. December 2021 has no consequences for the Box 3 tax up to and including 2016. According to AG, in the Box 3 judgment, the Supreme Court explicitly places emphasis on matters that are new in 2017. According to AG, this indicates that it is the Supreme Court’s view that the situation in 2017 (and thereafter) differs to such an extent from previous years that a different assessment had to be made than with respect to previous years. . According to the AG, it follows that the judgment does not apply to estimates imposed on older years.

II. In AG’s view, the December judgment does not mean that Box 3 can no longer be used in its entirety. The Supreme Court has ruled that the 2017 standard rate scheme applicable from 2017 is in violation of property rights and the principle of equality for taxpayers, who as a result of this scheme are faced with a tax based on a higher benefit of savings and investments than the actual return. This means that it must be examined per taxpayer to what extent he / she is disadvantaged by the Box 3 tax; only for that part should reasonable compensation be offered in order to restore rights.

III. AG argues that, in the light of the December judgment, taxpayers should be given a right of way, proving that the actual return they have achieved in box 3 is clearly less than the fixed return calculated by law.

IV. In AG’s view, the precise interpretation of what constitutes reasonable compensation for the purpose of restoring rights in a specific case is reserved to the actual judges, that is to say, the courts and the courts of appeal. They will have to make a choice – based on all the specific facts and circumstances of the case in question – among the various options for offering access to justice. The Supreme Court can then marginally test this interpretation.

V. It can be deduced from the December judgment that the real return in ‘normal cases’ can be calculated as the net proceeds of ordinary income such as interest, dividends and rent without deduction of financing costs. The parties can also reach an agreement and jointly determine the amount of the actual return. They could also choose, for example, to apply the statutory lump sums to the taxpayer’s savings and other assets.

According to AG, the objections in the case in question against the court’s decisions for the years 2015 and 2016 are unfounded. In his view, the case should be referred by the Supreme Court to a Court of Appeal, which assesses whether and – if so – for what amount to grant the interested party leave to appeal for the years 2017 and 2018.

Judgment of the Supreme Court

It is not yet known when the Supreme Court will rule.

The Advocate General’s opinion is an independent advice to the Supreme Court, which is free to follow that advice or not. The Advocate General is a member of the Prosecution Service at the Supreme Court. The prosecution at the Supreme Court is an independent, autonomous part of the judicial organization. It does not fall under the prosecution.

Publication on

ECLI: NL: PHR: 2022: 180

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