The finance ministry is delaying its deadline to bring in a new system of taxing assets until 2028 now the government’s most senior advisory body has slammed suggestions for reform.

Junior minister Tjebbe van Oostenbruggen said in a briefing to MPs that extra time is needed to ensure the legislation does a proper job when it is finally enacted.

The Council of State said earlier this month the government’s proposed changes to the way savings and investments are taxed in the “Box 3” system needs a major overhaul because of their feasibility and complexity.

In particular, the council warned that the new system would have substantial repercussions for both taxpayers and the tax office, leading to poorer service, reduced opportunities for prior consultation with tax inspectors, and insufficient oversight.

The government has been forced to come up with a new system following two major court rulings, which have said the current system based on assumed returns violated the European Convention on Human Rights.

The Supreme Court ruled in 2021 that the system contravened EU legislation and ordered the government to rethink. A revised system was also thrown out by the courts in June.

Under the new proposal, the wealth tax would be based on actual returns. The primary tax would be a wealth accumulation tax, with some exceptions. Certain types of assets, such as real estate which is rented out and shares in start-up businesses, would be subject to a capital gains tax.

Van Oostenbruggen said the delay will lead to an additional loss to the treasury of some €2.5 billion euros in 2027. The government, he said, aims to cover this by increasing the fictitious return levied over other assets by 1.78% from 2026 and by reducing the tax-free allowance to €52,048.

Taxpayers who feel they are being charged too much will still be able to declare this to the tax office.