Can savers expect compensation for lost tax returns?

Het Financieele Dagblad
Erasmus School of Economics

Savers who paid more tax over their savings than they earned in return on this money, stay in uncertainty about a possible compensation. Hans Vijlbrief, State Secretary of Finance, is considering advices on capital gains tax that are difficult to reconcile. Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, gives his opinion on the matter.

Safely achievable returns

In a ruling from June 2019, the Supreme Court stated that the safe return to be achieved in the years 2013-2016 had to be at least 1.2%. A yield below 1.2% combined with a tax of 30% on an assumed yield of 4%, as it existed in Box 3 up to 2017, meant that taxpayers had to hand in on their assets, which is a violation of European property law.

Compensation for savers

A committee of three independent experts advises Vijlbrief to compensate savers who paid more tax than they earned on their savings in the period 2013-2016. The Netherlands Bureau for Economic Policy Analysis (CBP), for its part, indicates that it is not possible to establish unequivocally how much return taxpayers were able to achieve in the relevant period without running the risk of losing their savings. According to the CBP, the indications given by the Supreme Court and the Court of Appeal of The Hague do leave room for alternative calculations.

Peter Kavelaars agrees that Vijlbrief should compensate savers on the basis of CPB calculations. However, he calls it 'weird' that the highest tax court has set 1.2% as a minimum. According to him, the standard should be 4%, which has not been achieved. Kavelaars himself was a member of the Van Dijkhuizen committee, which already recommended revising box 3 in 2013, because the assumed return of 4% already seemed to be unfeasible at that time. Kavelaars does not find it necessary to calculate the actual and safely achievable return to one decimal place precise, the fixed return in box 3 was also just a rough fiction, he concludes.

Peter Kavelaars, Het Financieele Dagblad, 4 May 2020

Professor
More information

The entire article from Het Financieele Dagblad can be downloaded above, 4 May 2020 (in Dutch).