01/05/23

NETHERLANDS: Delays around implementing new wealth tax already costing Dutch gov't €780 mil.

As published on nltimes.nl, Monday 1 May, 2023.

Delays around the introduction of a new wealth tax are costing the government more and more. State Secretary Marnix van Rij (Finance) postponed the implementation from 2025 to 2027, and that will cost the Dutch treasury some 780 million euros, De Telegraaf reports.

The Netherlands has to introduce a new wealth tax because the Supreme Court overturned its previous one. The old system taxed wealth in box 3 of the tax system on projected returns instead of actual returns. With the low-interest rates up until Russia’s invasion of Ukraine, many Netherlands residents ended up paying more tax on their savings than they should have.

The government hoped to implement the new wealth on 1 January 2025. Early this year, Van Rij postponed that to 1 January 2026. That delay cost 385 million euros. He now pushed the introduction by another year, and the costs of the delays increased to 780 million euros, according to the newspaper.

The spring memorandum, the spring update to the annual budget that the government sent to parliament on Friday, states that “this loss is covered within the box 3 domain.” According to the Telegraaf, that probably means an increase in capital gains tax. Van Rij will announce more details about that in August.

According to Van Rij, “the delay is inevitable and must be covered.” The Tax Authority needs more time to update its IT systems. The wealth tax is also complicated legislation, and the Ministry wants to ensure it gets it right, especially after the vast amounts of compensation resulting from the Supreme Court ruling.