Disagree with your Dutch capital yield tax 2017? Use PwC's model-letter of objection

What does this mean for you?

If you disagree with the calculation of the notional yields on your box 3 income, please make sure you timely file an objection. Since the Dutch Tax Authorities have already imposed many provisional income tax assessments for 2017, your objection is in any case regarded as timely if filed before 15 July 2018.

Right now, an instruction for a mass appeal against the provisional tax assessments for 2017 is being prepared. However, as of 1 January 2016, the regulations on mass appeal have changed. Under the new regulations, individuals who have not filed a letter of objection will no longer automatically become part of the mass appeal. Under the new mass appeal regulations, all filed objections are processed together based on a selected number of test cases.

The State Secretary also indicates that the outcome of legal procedures for the years up to 2016 are not binding for the years 2017 and after. Since on 1 January 2017, the basis for calculation of the notional yield for box 3 has changed.

Model-letter of objection for box 3 capital yield tax

If you wish to file a letter of objection, you can make use of the model (Dutch) letter of objection. This can be downloaded free of charge at the bottom of this page. The basis of the object, namely that your individual box 3 tax levy has resulted in an ‘excessive burden’, will require a considerable substantiation. In that respect, the content of this model letter of objection has been written for information purposes only, does not constitute professional advice and should not be regarded as a substitute for it. Your contact with PwC could assist you with this.

The odds for your appeal to be successful depend on whether your effective taxation can be considered as an excessive burden in comparison to your actual income. The Dutch Supreme Court has previously determined that the design of the former box 3 scheme (with its notional yield of 4%) was within the ‘wide margin of appreciation’ of the Dutch legislator. Yet, this does not rule out the possibility that under specific circumstances, in an individual case, a taxpayer’s box 3 tax may be considered an ‘excessive burden’ nonetheless. If this is the case, the taxpayer’s income tax assessment cannot be maintained. Please note that the Dutch Supreme Court has only once decided the box 3 tax did indeed result in an ‘excessive burden’ (Hoge Raad 6 april 2018, only available in Dutch), up to now this exception was only be granted under very unusual circumstances.