The Inland Revenue has been sending out letters about box 3 in recent days. Should you take action in response to those letters?
2 letters
There are two letters involved:
- A letter for people who declared income from savings and investments (box 3) in their 2019 income tax return and who did not have an irrevocable assessment for 2019 by 24 December 2021;
- A letter for all people who declared income from savings and investments in the years 2021 to 2023.
Letter on 2019
If on December 24, 2021, for the year 2019 had not yet received an assessment or that assessment was not yet irrevocable at that time, your formal rights must be secured by applying for an ex officio reduction of the 2019 assessment. This can be done using the form enclosed with the letter, which can be submitted with the return envelope also enclosed. PLEASE NOTE: The request (form) must be no later than 31 December 2024 have been received by the Inland Revenue. Once the form for the declaration of actual returns is ready (see below), the request can be completed.
An assessment is irrevocable once the objection period has expired without an objection having been lodged. The objection period runs during the 6 weeks after the date of the assessment. It must be the final assessment. This is the assessment whose assessment number ends with H.96. The date of the assessment is mentioned on the assessment notice.
For the year 2020 no action needs to be taken (yet). This is because a request for ex officio reduction of an assessment can be filed until 5 years after the tax year. For the year 2020, this can therefore be done until 31 December 2025 at the latest.
Passing on actual returns
For the years 2021 to 2023 the Tax Authorities do not issue final assessments in response to returns in which income from savings and investments (box 3) is declared. This is because the Supreme Court ruled that income tax may not be levied on more than the actual return achieved on the assets and liabilities belonging to box 3. To comply with the Supreme Court's ruling, taxpayers must report to the Tax Administration what their actual return was in the relevant years. For this purpose, the Tax Authorities are developing a form, which is not expected to be available until mid-2025 (see also our article Form box 3 will not come until June 2025).
The letters circulated by the Inland Revenue are intended to inform about this. Therefore, no action needs to be taken in response to these letters. Indeed, if you send the Inland Revenue a statement of your actual return now, this will be held regardless of the year to which it relates and you will be asked to make the statement again in 2025 using the form.
Actual return
Crucial, of course, is what exactly is meant by actual returns. That is not yet entirely clear. The Supreme Court has said something about it in its judgments, which we describe in our articles Supreme Court again rejects flat-rate levy box 3 and More rulings on box 3. It is expected that some of the currently remaining questions will be answered in rulings that will follow in the coming months. What is already clear is that the rules formulated by the Supreme Court will by no means result in less income tax due in Box 3 for everyone.
Any questions? Feel free to contact with us.