Supreme Court argues that the interest on tax rate for corporate income tax purposes is non-binding

When does interest on tax apply?

Broadly speaking, the Tax Inspector charges interest on tax if a taxpayer’s actions cause a too long delay in imposing a tax assessment with an amount payable by that taxpayer. Conversely, the Tax Inspector reimburses interest on tax if it takes them too long to determine a refund. Hence, the interest-on-tax regulation is based on the so-called notion of default (verzuimgedachte).

The basic assumption for return-based taxes is that the Tax Inspector determines a (provisional) assessment with an amount to be paid within eight weeks of filing a request or within thirteen weeks of filing a return. Considering a payment term of six weeks, the interest calculation subsequently ends after fourteen or nineteen weeks, respectively, provided that the (provisional) assessment is determined in accordance with the request or the return.

For corporate income tax and income tax purposes, however, the interest calculation never starts earlier than six months after the end of the (financial) year. What’s more, no interest is charged if the preliminary assessment is based on a request received before the first day of the fifth month after the end of the tax period, or if the return is filed within the regular deadline. This, too, is subject to the condition that the preliminary assessment is determined in accordance with the return.

Interest on tax rate

Initially, the interest rate for all taxes had been aligned with the statutory interest on non-trading transactions. As early as 2014, though, the looming failure to achieve the budgeted revenue from the regulation prompted the legislator to decide on a distinction between corporate income tax and other taxes. From then on, corporate income tax was subject to the statutory interest on trading transactions subject to a minimum of 8%, while other taxes were subject to the statutory interest on non-trading transactions subject to a minimum of 4%.

Lower interest rates temporarily applied during the coronavirus crisis - just 0.01% in the period from 1 June 2020 through 30 September 2020. On 1 October 2020, it was decided to set the interest on tax rates by order in council, as this enabled a more flexible response to changing circumstances. In the period from 1 October 2020 through 31 December 2021, this percentage was 4% for all taxes. On 1 January 2022, the former situation was reinstated. A minimum interest rate of 8% once again applied to corporate income tax (and at this point to withholding tax as well).

Judgment of the Northern Netherlands Court

However, on 7 November 2024, the Northern Netherlands Court (Rechtbank Noord-Nederland) ruled that the distinction made (again) since 1 January 2022, contravenes the principle of proportionality. Unlike Acts of Parliament, secondary legislation, including orders in council, may be assessed against general principles of law. The court applies an assessment framework developed by the Supreme Court, stating that first and foremost the court must show restraint when assessing the balancing of interests made by the regulator upon introduction of the regulation. However, the adverse consequences of a regulation for taxpayers may not be disproportionate to the objectives to be achieved. And, as the court argued, that is certainly what happened in this specific case, in which the parties agreed that the interest on tax must be calculated at a rate of 4%. The court reduced the interest charged accordingly.

Supreme Court ruling

On behalf of the State Secretary for Finance, a leapfrog appeal was lodged against the court’s ruling but the Supreme Court declared this appeal unfounded on 16 January 2026. Our highest court ruled that the high interest rate for corporate income tax purposes applicable since 1 January 2022 contravenes both the principle of proportionality and the principle of equality. Following the court and the conclusion of Advocate General Koopman, the Supreme Court rejected the argument put forward by the legislator that a tax debt that has not yet been formalised is comparable to a trade receivable. Likewise, the Supreme Court dismissed the argument that taxpayers may avoid interest on tax as much as possible by filing their returns on time or requesting a preliminary assessment or review thereof. Even if an increase in the tax burden is avoidable, it must not be disproportionate to the objectives to be achieved. No interest on tax having been charged for the first six months after the end of the financial year did not make the Supreme Court change its mind, nor did the fact that the high interest rate also applies to interest on tax to be reimbursed for corporate income tax purposes. The conclusion was that the high interest on tax rate applicable since 1 January 2022 (Article 1(b) of the Interest on (Overdue) Tax Decree (Besluit belasting- en invorderingsrente) is non-binding. In this specific case, as mentioned above, the parties agreed that the interest charged must subsequently be reduced to 4%.

Consequences

In the context of the pending collective complaints procedure, the Supreme Court considered that its ruling means that the interest calculation for corporate income tax purposes must be in line with the regular interest on tax rate that applies to other taxes (Article 1(a) of the Interest on (Overdue) Tax Decree). For the years 2022 and 2023, this concerns the statutory interest on non-trading transactions, subject to a minimum of 4%. Effective from 1 January 2024, the calculation method changed and now aligns with the ECB base rate plus a mark-up of 3 percentage points, with the interest rate being at least 4.5%. The Supreme Court argued that these interest rates (including the minimums applied) do not contravene Article 1 FP ECHR or the general principles of law. Nor does it involve a punitive sanction. The Supreme Court thus deviates from the conclusion of Advocate General Koopman, who had advised to ignore the minimum interest rates and align with the statutory interest on non-trading transactions.

Collective complaints

Now that the Supreme Court has answered the legal questions in the pending collective complaints procedure, the Tax Administration is expected to issue a collective ruling on the objection within six weeks. The Tax Inspector will then have six months to reduce the interest on tax charged on (provisional) corporate income tax assessments, provided that legal remedies against the interest charged have been invoked in a timely manner. Interest on tax on levies to which the regular interest rate applies is not eligible for reduction.

• Northern Netherlands Court, 7 November 2024, 23/5244, ECLI:NL:RBNNE:2024:1422
• Conclusion of the Advocate General, 26 September 2025, 24/04619, ECLI:NL:PHR:2025:1044
• Supreme Court, 16 January 2026, 24/04619, ECLI:NL:HR:2026:59