Consequences of savings tax ruling ‘a difficult puzzle to be solved quickly’

“A mediocre missile attack on the finances of the coalition agreement,” is what one participant calls the problems with the so-called savings tax. “It is a very difficult puzzle,” Finance Minister Marnix van Rijg wrote before the House of Representatives.

In December, the Supreme Court ruled that the current system for taxing savings and investments is against the law. This case was brought by 60,000 savers who thought it was unfair that they received no interest on their savings, but had to pay capital gains tax. The Supreme Court also ruled that they should be compensated.

So this compensation is for those with wealth. Thus the discussion also touches on the worldview of the different political parties and what they consider fair taxation. Depending on the policy choices that will be made in the near future, this will include several billion to several billion euros. On Wednesday, the first impetus for that will be given in a debate in the House of Representatives.

Van Rij puzzle consists of a number of smaller puzzles.

Who is compensated?

The Supreme Court ruling concerns tens of thousands of people who objected in 2017 and 2018. The Secretary of State assumes that people who objected in 2019 and 2020 are also entitled to compensation, as the system is still operating as it is at that time.

Plus, they’re not the only ones who have paid a lot of taxes. According to Bond voor Belastingbeers, this concerns more than one million people annually.

Van Rig is looking into what the ruling means to them and also wants to know which of these people really paid the most. For example, the reason may be that a person did not immediately receive money from investments, but they became more valuable. The question is how to calculate this.

There is also the question of whether Tax and Customs Administration can find out who has paid too much tax at all. In total, about 3 million people pay taxes in Box 3. Most of them make more profit on their assets than the tax authorities calculate.

What will happen to the years from 2021?

Now that the decision has been made, Tax and Customs Administration can no longer impose assessments on the basis of incorrect law. “The ruling therefore also applies to all taxpayers with income from Box 3 in tax year 2021 and beyond,” Van Rig wrote to the House of Representatives.

Thus the budget gap could become larger if a solution is not found quickly for the current tax year and the coming years. This easily means around 4.5 billion euros per year.

It was already agreed in the alliance agreement to change the system from 2025 and start calculating with a real return. Van Rijk writes to the House of Representatives that this could not be brought forward faster. In order to prevent the loss of the state treasury until then, a temporary solution must be found. So the emergency law is necessary, says the Secretary of State.

Who will pay for it?

In total, the compensation bill can reach tens of billions of euros, depending on the chosen solution. VVD does not want to prejudge the debate yet. Other coalition parties do it and they’re clear: Money has to be found differently than the wealthy, especially when it comes to the coming years.

This is a sore point. In the debate over the new government’s plans, one of the opposition’s main criticisms has been that this coalition does little to combat wealth inequality. It’s definitely a sensitive topic among VVD supporters.

“The most important thing is that workers don’t foot the bill for this, and that people with good wealth continue to contribute well to taxes in the future,” says Peter Greenwis of ChristenUnie.

Romke de Jong of the D66: “What’s important for the D66 is that we don’t take it away from workers, or from education, housing or climate plans.” CDA’s Inge Van Dyck: “I think it’s very easy to give up the national debt. I think the biggest shoulders should bear the heaviest burden.”

And while researching, what is technically feasible in tax and customs administration should also be considered. The Secretary of State told the House of Representatives this evening that a final resolution would take months.