Two notable rulings by the Council of State on June 3, 2026, reveal structural flaws in the recovery operation.

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1. The Tax Benefits Department no longer has to pay penalty payments if it decides late on applications for actual damages. Why not? Because the damage settlement system is so overloaded that penalty payments can no longer function as an incentive. They are counterproductive because they delay the process. Result: citizens no longer have leverage.

2. The average waiting time is 2 years and 3 months. If nothing changes, it will be 18 years.

3. The alternative damage compensation routes have no legal basis (Equivalent Recovery and MyRecovery).

What is clear is that the Actual Damages Committee has been sidelined. Besides the fact that the damage compensation routes have no legal basis, the actual damages are also not being paid out.

Example of an entrepreneur: he went bankrupt due to being suspected of fraud. In doing so, he lost his semi-detached house, his bank balance, all his possessions, and his business. His house was auctioned. The bank bought his property for 218,000 euros. He was left with a debt of 250,000 euros. His investment portfolio of 43,000 euros, associated with the mortgage, was reduced to 0 by the costs the bank later charged. Consequence: he no longer had a home for his family and was forced to live in a shed. He suffered a brain hemorrhage. His wife had to drop out of her university studies. He received a letter in 2021 stating that he had been wrongly treated as a fraudster.

Now for the damage settlement:

Through the alternative routes, he receives a maximum of 35,000 euros in damages for the loss of his possessions. For the loss of his business, he receives 3,000 euros.

The Actual Damages Committee took 75% of these actual losses into account. There is now no other way than to go to a civil court to receive the actual damages.

These two routes therefore do not cover the damages. An individual tailor-made solution for these situations was promised. However, this has not materialized.

Entrepreneurs have waited the longest and are now being presented with a damage compensation straitjacket that doesn't fit.

Second ruling:

Appeal unfounded, yet legal costs reimbursed

In the comprehensive assessment, it is checked annually whether there are clawbacks or other issues. Without insight into the actual clawbacks, this is difficult to determine. This crucial information (LIC lists: overviews from the National Collection Centre in Heerlen) was only provided 15 days before the hearing. The Division faults the Tax Benefits Department for: - late submission of crucial information - unnecessary ambiguity for the appellant - incomprehensible negligence in verifying the core issue. The Tax Benefits Department is ordered to pay the legal costs.https://lnkd.in/eXM-QufF

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Council of State halts penalty payments for delays in benefits recovery

The Administrative Jurisdiction Division of the Council of State has decided that the Benefits Department temporarily does not have to pay penalties. This applies if the department is late in deciding on compensation for the childcare benefits affair. The measure will remain in effect until June 3, 2027. The court believes that these penalties, also known as coercive fines, currently do not help to expedite decisions. The lawsuits regarding these penalties are, in fact, so time-consuming that the actual remediation work is further delayed.

The problems are significant: affected parents wait on average more than two years for a response. Without changes, it will take another eighteen years before all applications are processed. The court fully understands the parents' frustration but states that the penalties are counterproductive. The Benefits Department must use its time for substantive decisions rather than legal discussions about deadlines.

There is also criticism regarding the new remediation paths chosen by the government. According to the court, a legislative amendment is first required for this new approach. The Benefits Department must still endeavor to make a decision within two weeks after a court ruling. In 2027, the situation will be re-evaluated to determine if penalties will be effective again.

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