The Supreme Court also offers taxpayers legal protection for compensation aimed at restoring rights following a massive opposition procedure in box 3

Box 3 judgment of 24. December 2021

In its judgment of 24 December 2021 on the massive objection issue in Box 3, the Supreme Court ruled that the fixed scheme in Box 3, which has been in force at system level since 2017, is contrary to property rights and the principle of equality from the European Convention on Human Rights rights and fundamental freedoms. In the Supreme Court’s view, there is no reasonable relationship between the interests that the legislature has wished to pursue with the standard rate system (feasibility, reality and dividends) and the inequality that the system entails. In that case, the Supreme Court was obliged to offer the taxpayer adequate legal protection against the established violation of his fundamental rights. This legal protection requires compensation aimed at restoring rights, the extent of which can generally only be reasonably determined.

Overall decision by the Minister of Finance on the massive objection

On February 4, 2022, the Secretary of State issued a comprehensive decision on all objections identified as massive objections to the Box 3 tax for the years 2017 to 2020. In that decision, the Secretary of State declared the objections well-founded. The legislation prescribes that the supervisory authority, within six months after this collective decision, decides on a reduction of the taxpayers’ assessments that fall under the massive objection. As the Supreme Court ruled in its judgment of 24 December 2021, the extent of any reduction can generally only reasonably be determined by the inspector.

This case

The case, which has now been submitted to the Supreme Court, concerns a taxpayer whose case fell under the mass objection for the years 2017 and 2018. The inspector has divided the objections into a part relating to the mass objection and a part relating to the issue. whether the Box 3 tax constitutes an excessive individual burden for this taxpayer. The inspector subsequently declared the ‘individual’ objection unfounded. That decision has been appealed. The Court of Appeal dismissed the appeal against the ‘individual’ objection. Pursuant to the Supreme Court’s decision of 2 July 2021, the court has not ruled on the massive objection.

Procedure before the Supreme Court

The issue of mass objection was decided in the collective decision on the mass objection of 4. February 2022. The inspector must therefore, within six months after, make a decision on reduction of the income tax assessments for the years 2017 and 2018 imposed on this taxpayer. By law, this decision can not be appealed to the tax court. In these cases of cassation, the question is whether and, if so, how the legal protection can still be offered to the taxpayer in terms of the amount of compensation intended to restore rights.

Supreme Court judgment – legal protection for access to justice

The Supreme Court offers taxpayers who fell under the massive objection legal protection for the extent of the restoration of rights. In this connection, the Supreme Court states that a taxpayer who does not agree with the Authority’s decision on the (extent of) the reduction may still submit a request for (further) reduction of the assessment to the Authority. Such a request may, if certain conditions laid down in the law are met, lead to the assessment being (further) reduced by the inspector ex officio. The Supreme Court is of the opinion that the condition is met that the inaccuracy of the assessment does not stem from case law that has only been issued after the assessment has been irrevocably substantiated. The attacks that fell under the massive objection had not yet been irrevocably established when the Box 3 verdict of 24. December 2021 was handed down. The taxpayer may object to a possible refusal of the request for ex officio reduction and subsequent appeal to the tax court.

Supreme Court ruling – procedural economics

If an objection to an assessment is divided into a mass objection request and an “individual” objection, as is the case here, it is possible that the taxpayer would have to go through two procedures for one assessment: first, the already pending procedure on the ‘individual’ Objection and, secondly, a new procedure following the request for ex officio reduction. It is the view of the Supreme Court that this is disproportionately burdensome. Therefore, from the date of the collective decision (4 February 2022), the case judge can take into account the consequences of the collective decision, including the decision to reduce the assessment, when considering the (higher) appeal case regarding. the ‘individual’ objection in its assessment of the case. If the case of the ‘individual’ objection is already before the Supreme Court, it is too late for that. That is the case for this taxpayer.

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ECLI: NL: HR: 2022: 718

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