Article

2024-06-30 Europe

Panic Time: Netherlands' Wealth Tax Gets Shot Down, Must Be Refunded

[Telegraph HT HotAir] The Netherlands is expected to pay billions of pounds in compensation to taxpayers after a divisive levy on investments and second homes was shot down by the Dutch Supreme Court.

On 6 June, the court ruled that the country’s wealth tax went against the European Convention on Human Rights because it forced savers and investors to pay tax on income they had not earned.

The decision has opened the door to legal redress for hundreds of thousands of people who were overcharged by the tax authority.

Outgoing state secretary for finance Marnix van Rij estimated that the upfront cost would be €4bn — or £3.37bn.

But the true cost could rise by billions of euros per year while the government works out a new system to replace the controversial levy — a system not expected until 2027.

The Supreme Court’s decision may serve as a warning for other countries seeking to raise revenue from taxes on savings and investments.

Labour is considering options for extra wealth taxes if it wins the general election on 4 July, as reported by the Guardian.

The party is under pressure to explain how it will fund its plans for public services, and so far has ruled out raising income tax, National Insurance or corporation tax.
100pc tax rate

Since 2001, the Netherlands has divided income into three different types, known as boxes.

"Box One" taxes employment income, "Box Two" applies to people with a substantial share in a business, and "Box Three" is effectively a wealth tax — levied on income from savings, investments and second properties.

For years Box Three has been under attack because it is based on fictional — rather than actual — returns.

There have been various iterations of the levy but when it was first introduced, the government assumed that everyone earned a 4pc return on their assets. Taxpayers were then charged 30pc on that yield.

This was regardless of whether they held cash, stocks or property and regardless of how their investments performed.

At the time, Minister of Finance Gerrit Zalm presented the arrangement as risk-free. "Any fool can get a return of more than 4pc," he said.

But little did Mr Zalm know that the credit crunch was just around the corner.

Robert van der Jagt, of accountancy firm KPMG, said: "At the time, 4pc was very favourable. But then the financial crisis happened — and interest rates dropped to well below 4pc."

Savers were effectively punished for holding their money in low-interest accounts, with many forking out more in tax than they earned from their wealth. As a result people were charged effective tax rates of 100pc or more.

From 2008 onwards, taxpayers started challenging Box Three, which led to the government reforming the levy in 2017.

Under this new regime, the deemed yield on savings was cut to 1.63pc while the yield on investments and second properties was brought up to 5.39pc. This was to reflect the fact that investors usually earn higher returns. These yields were then adjusted every year.

But taxpayers were still being charged based on hypothetical returns. So on 24 December 2021, in the so-called Christmas judgment, the Supreme Court decided the 2017 regime had violated taxpayers’ property rights.

Posted by Frank G 2024-06-30 00:00|| || Front Page|| [11131 views ] Top
File under: Tin Hat Dictators, Presidents for Life, & Kleptocrats

#1 Warning for the demoncrats thinking about such a thing in the US.

Spoiler alert:

They still will push it and get shot down

Posted by DarthVader 2024-06-30 01:12|| 2024-06-30 01:12|| Front Page Top

#2 & the working citizen of modest means was squeezed & Squeezed until dry to fund insane European parliament activist hobby projects, my taxes for instance funded hamas with no-one asking any questions.

Posted by Rupert+Gleck2911 2024-06-30 05:00|| 2024-06-30 05:00|| Front Page Top

#3

How about a simple FLAT TAX?
Where taxes are equally imposed on all taxpayers, WITHOUT any special "donor" included exemptions.

Posted by NN2N1 2024-06-30 05:46|| 2024-06-30 05:46|| Front Page Top

#4 Taxation is theft, the bulk of what gummint spends is on redistribution programs that are not authorized anywhere in the Constitution.

Posted by M. Murcek 2024-06-30 06:34|| 2024-06-30 06:34|| Front Page Top

#5 Wealth tax won’t happen in America until the king of crony capitalism, Warren Buffett, passes away and after his Billions are sheltered into ‘charitable trusts’ run by his family and friends.

Posted by Airandee 2024-06-30 06:55|| 2024-06-30 06:55|| Front Page Top

#6 There would be a lot of 'wailing and gnashing of teeth' for a true Flat Tax proposal NN2N1, as it would also target the lower earning 'constituencies'.

The aforementioned concerns would only occur during election years, however.

Posted by Mullah Richard 2024-06-30 07:55|| 2024-06-30 07:55|| Front Page Top

#7 Everyone should have skin in the game. Yes some flat amount of a peon's annual income is a lot of money to the peon. But it does make him equal - in at least one way - with the people who really pay the freight in America.

Posted by M. Murcek 2024-06-30 08:06|| 2024-06-30 08:06|| Front Page Top

#8 Maybe if an endless supply of cheap labor wasn't being imported illegally wages might rise.

Posted by M. Murcek 2024-06-30 08:10|| 2024-06-30 08:10|| Front Page Top

#9 There was a US court decision earlier this week that upheld a tax on some unrealized income. details

Posted by Mercutio 2024-06-30 09:58|| 2024-06-30 09:58|| Front Page Top

#10 The key wording seems to be realizedbut undistributed.

Posted by M. Murcek 2024-06-30 10:09|| 2024-06-30 10:09|| Front Page Top

#11 Why no flat tax?

Because pols want to play the game of 'envy' from the lower caste against the upper caste. You see they talk 'soak the rich', the rich in turn to protect what they have buy the pols to write intricate loop holes and write offs that allow the rich to avoid being soaked. How do you get graft and corruption without the game?

Posted by Procopius2k 2024-06-30 10:32|| 2024-06-30 10:32|| Front Page Top

#12 No flat tax because that eliminates the need to buy a politician to reward the donor and punish the competition. Crony capitalism requires pay to play.

Posted by Airandee 2024-06-30 16:19|| 2024-06-30 16:19|| Front Page Top

#13 No flat tax because it's all a game and the politicians enhance their enjoyment of it by tilting the playing field.

Posted by Abu Uluque 2024-06-30 17:27|| 2024-06-30 17:27|| Front Page Top

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