The case
The interested parties are a married couple with their own home and box 3 assets consisting of bank balances, receivables, a second home that is occasionally rented and two rented apartments. The Box 3 Restoration Act distinguishes three types of assets in box 3: bank balances, debts and other assets. The dispute concerns the couple’s shares in the reserves of the three owners’ associations (VvEs) totaling € 10,807. The Inspector has classified that amount as ‘other assets’ (investments) and has therefore calculated and taxed a return of 5.38% on it for 2018. The couple believes that these shares are ‘bank assets’ because homeowners’ associations are required to keep their reserves in a bank account and that therefore only a 0.12% (savings) return may be taxed on them.
Proceedings at the court
Based on the Box 3 judgment of the Supreme Court, the Arnhem-Leeuwarden Court ruled that when offering legal redress to the couple in 2018, the bank balance percentage of 0.12 applies to their shares in the VvE reserves. It is based on the actual return achieved on the VvE reserves and the fact that VvEs are legally obliged to keep their reserves in a bank account.
The appeal in cassation by the State Secretary of Finance
According to the State Secretary, the legislator has a wide discretion in providing the required legal redress and within that freedom, partly for feasibility and budgetary reasons, it may choose not to split ‘other assets’ into different asset titles, each with its own return.
Advice AG
According to AG Wattel, taxation based on an average investment return always leads – by definition of ‘average’ – to discrimination of the below average and privilege of the above average. The actual heterogeneity of individual asset returns in the years 2017-2022 will not change if a different average is calculated retroactively or if bank assets and debts are separated and given a lower average percentage than other assets. The heterogeneity of the return on other assets (investments) is probably greater than that of the return on all assets because savings interest has much smaller heterogeneity than investment results. Although the Recovery Act taxes savings returns more realistically (lower), this law probably increases the arbitrariness of the owners of other assets. According to the AG, the Recovery Act therefore violates – except for savings – the prohibition of discrimination and the fundamental right to property ownership at least as much and as systemically as the old box 3 2017 to be restored.
This means the following for the specific dispute: the couple’s assets are much greater than just the VvE reserves shares and, according to the AG, the Court should therefore not have limited itself to the question of whether those shares constitute ‘bank assets’ or ‘other assets’. ‘, but should have been the difference between the statutory and the actual net return on total assets
to establish. After all, according to the legislator, the Recovery Act must better approximate the taxpayer’s actual capital return. Only if the statutory and actual total returns are too far apart to the detriment of the taxpayer, legal redress is required. The AG recommends that the Supreme Court determine a margin of tolerance between the actual and statutory returns and send the case back to the court to have the actual net return of the couple’s entire assets determined in 2018 and compared with the 2018 return according to the Recovery Act.
Supreme Court ruling
The Supreme Court is expected to rule in six months.
The Advocate General’s conclusion is independent advice to the Supreme Court, which is free to follow that advice or not. The Advocate General is part of the public prosecutor’s office at the Supreme Court. The public prosecutor’s office at the Supreme Court is an autonomous, independent part of the judicial organization. It does not belong to the Public Prosecution Service.
Publication on Rechtspraak.nl
ECLI:NL:PHR:2023:655