Council of State criticizes cabinet's Box 3 plan and advises postponement

The Council of State has issued a critical assessment of the Dutch government's proposed reforms for the box 3 tax system, labeling the plan with a 'C' rating. The council suggests that the proposal should not be submitted in its current form, as it identifies significant obstacles and warns that the intended 2028 implementation date is likely unfeasible, recommending a delay until 2030 instead. Furthermore, the council criticized the government's rush, arguing that it compromises the legislative process and ignores feedback from the tax authorities regarding execution risks.

The current proposal seeks to replace an earlier wealth increase tax with a new capital gains tax, which would only tax realized profits. However, the government faces ongoing challenges in securing funding for these reforms, with previous attempts to offset budget shortfalls meeting resistance from parliament. State Secretary Eelco Eerenberg is currently working on revisions to the plan, including adjustments to the financial coverage, as the government attempts to push the legislation through parliament before the end of the year.