This is what we now know about box 3
Box 3 taxation is a subject that’s been in the news a lot lately, resulting in a lot of questions. In this blog, we’ll discuss the most important facts.
other assets (crypto, real estate), minus your debts. The Dutch Tax and Customs Administration assumes that you generate a certain taxable return through this capital, such as interest, dividend or rental income.
A fixed amount of capital is tax-free: the tax-exempt capital. From 2021, this tax-exempt capital is set at €50.000 for individuals and €100.000 for fiscal partners. The Dutch Tax and Customs Administration always uses 1 January of that year as the date of reference. Suppose your capital as an individual is higher than €50,000 on 1 January 2021, you must state this in your tax return for 2021.
In the Netherlands, the taxation of capital is (or was actually) not based on the total amount of assets, but on the so-called yield of your assets. When calculating this wealth tax, the Tax and Customs Administration uses an assumed return on the net capital, also known as the hypothetical yield.
However, just before Christmas, the Supreme Court ruled that the Dutch government should not have used a hypothetical yield. As a result of the current low interest rates, the actual gains for people with relatively more savings are a lot lower, so that their tax bills are higher than the yield. According to the Supreme Court, this is contrary to the right to property and the prohibition of discrimination, because everyone has the right to choose what to do with his or her assets. The Supreme Court therefore ruled that only the actual return can be taxed.
Since this verdict is so recent, it is not yet entirely clear what the consequences will be. The State Secretary and the Tax and Customs Administration are busy figuring this out. Their goal is to implement new regulations as quickly and as simply as possible.
Things we know so far:
- In the first instance, the ruling applies to taxpayers who have objected en masse. However, there’s a good chance that it will apply to everyone later, but that decision will not be made until May 1.
- Citizens with savings and/or investments will temporarily not receive a final assessment from the Dutch Tax and Customs Administration.
- The Dutch Tax and Customs Administration intends to correct all assessments that are not yet final in a ‘proactive manner’.
- The Dutch Tax and Customs Administration is currently investigating the consequences for all assessments that ARE final.
- In the provisional assessments for 2022, any box 3 taxations are still processed in the old fashion. The final assessment will then be imposed in line with the Supreme Court ruling.
- The 2021 assessment will also be imposed in line with the Supreme Court ruling.
- In the future, box 3 is intended to be taxed based on the actual return. This is something that has not yet been elaborated in the ruling of the Supreme Court. It’s therefore impossible to tell yet what the revision will actually yield or cost.
As soon as we know more, we will of course communicate this in an update of this blog.