The cabinet has agreed to spend €2.8 billion compensating the 60,000 taxpayers who lodged objections to the tax paid on their savings, which was based on a fictious rate of interest.

The 60,000 people will automatically get the compensation before August 4, tax minister Marnix van Rij told MPs on Thursday.

The Supreme Court ruled in December that the Dutch tax office was wrong to use a fictitious amount when calculating how much tax a couple had to pay on their savings, because it contravened the right to ownership and European human rights laws

Currently, all assets apart from own homes are placed in ‘box 3’ and taxed according to a fictional rate of income that the state believes these assets will be generating.

Ministers will decide before the end of this year if people who did not appeal at all, or did not appeal before the deadline, should also be compensated, Van Rij said.

From next year, savers will be taxed on the basis of the actual interest they receive over their savings, which is currently zero or a few fractions of a percentage point. That plan will be presented to parliament in September, Van Rij said.

From 2025, the current ‘box three’ tax system will be reformed and tax will only be levied over the actual returns on savings and investments, the minister said.