Court of Appeal of Den Bosch has ruled that no income tax may be levied on notional income from a second home that is not let out.
Christmas judgment
The Court naturally bases its decision on the Christmas judgment from the Supreme Court’s 2021 ruling. In that ruling, the Supreme Court decided that income from savings and investments (Box 3) may not be set at a level higher than the return actually achieved on the assets.
Holiday home
The case concerns a lady resident in Germany who owns a holiday home situated in the Netherlands, which she does not let out. The lady is subject to tax in the Netherlands in respect of the property situated there. The Tax and Customs Administration calculates a notional income based on the WOZ value of the holiday home and levies income tax on this amount.
According to the Court, this is not in line with the Kerstar judgment. Only the rent actually received (and any other direct income from the property) should be taxed, and in this case that amounts to €0. In fact, the lady incurred only costs in connection with owning the property. The Court also takes the view that the (unrealised) increase in the value of the property does not count towards determining the actual return on the property.
Summer
One swallow does not make a summer, as the saying goes. The same applies in this case. The Tax and Customs Administration will undoubtedly lodge an appeal in cassation against the Court of Appeal’s ruling in order to refer the question to the Supreme Court as to whether (unrealised) increases in value should be included in the taxable return. Various tax courts have now ruled on this matter, with mixed results. It is therefore high time that the Supreme Court provided clarity, but we suspect that this will take some time yet.
So, as with any soap opera, we’ll end with: to be continued!