We wrote We have already discussed this a few times. The question is whether the income tax levied on income from savings and investments (Box 3), based on a flat-rate return, is actually compatible with European law.
Massive objection
Miscellaneous tax judges, including, most recently, our highest tax court (the Supreme Court), have ruled over a number of years that the flat-rate levy is EU-compliant. Test cases on this issue are once again being heard for the year 2017. The mass objection procedure has now been declared applicable to these cases.
If you wish to take advantage of this, you must lodge an objection to your final income tax and national insurance contributions assessment for 2017 in good time. ‘In good time’ means that your written objection must be sent to the Tax and Customs Administration within 6 weeks of the date of the final assessment (and the Tax and Customs Administration must have received it within one week).
Individual objection
You may only join the test cases if you wish to challenge, in general terms, whether the flat-rate levy in box 3 is acceptable. If you wish to demonstrate that the levy constitutes an excessive burden in your specific case, you must state this very specifically in your notice of objection.
In that case, you will not be covered by the mass objection procedure. Furthermore, the Tax and Customs Administration will not suspend the processing of your objection. You must provide a detailed justification for your position, based on your specific personal circumstances, without undue delay. You must also bear in mind that the Tax and Customs Administration will want to have your arguments assessed by the tax court.
VWG is happy to help
If you would like help in deciding whether it is worth lodging an objection to the tax you pay on your income in box 3, please contact Get in touch with us. We can also explain the options available to minimise the tax liability in Box 3 as much as possible. Another important factor here is whether the Government will make significant changes to Box 3 with effect from 1 January 2019. This is likely to become clear on Prinsjesdag 2018.
Naturally, we continuously monitor all developments relating to this area of law. Judgments are published on a regular basis. It is interesting to read the criteria that the tax courts use to reach their decisions, which have so far all been unfavourable.
Excessive burden on an individual
When Arnhem-Leeuwarden Court of Appeal A case recently came to light in which a taxpayer claimed that, with regard to the tax levied under Box 3, he was facing an excessive individual burden. The Court of Appeal declared this claim unfounded and concluded that income tax on income from savings and investments must be paid in full.
The case relates to the 2013 tax year. At that time, the flat-rate return under Box 3 was simply calculated as 4% of the return base. And the return base was the value, as at 1 January, of the assets taxable under Box 3 (assets minus liabilities).
The taxpayer in this case had a return base of €1,745,425 in 2013. Based on the flat-rate return of 4%, the income from a substantial interest amounts to €69,817. The 30% tax on this amounts to €20,945.
The actual return consists of €29,178 in interest on savings, €9,506 in investment income and €6,600 in rent from a flat. The total actual income therefore amounts to €45,284. The tax burden thus amounts to 46% of the actual income received. The Court of Appeal does not consider this to be excessive. It is therefore in line with the rulings of the Supreme Court. The Court of Appeal also considers that, when assessing whether there is an excessive burden on an individual, no account should be taken of the fact that the value of the assets is decreasing: that is, inflation.