box 3

Recently, there have been many developments regarding the taxation of assets (box 3). We hereby inform you of the current state of affairs.

If you did not have Dutch taxable income on savings and investments (box 3) in the years 2017 until 2022, this information is not applicable to you. Did your assets increase or did you have the 30% ruling and will it end in 2023 (or soon)? Then the following might be relevant. 

We would like to inform you about the following topics:

  • Christmas Judgement and consequences assessments 2017-2020
  • Income tax Assessments 2021 and 2022
  • Bridging tax law 2023-2026
  • Actual return on investment
  • What to do?

Christmas Judgement and consequences assessments 2017-2020

In the so called “Christmas Judgement” of 24th December 2021 the Dutch Supreme Court ruled that Dutch taxation of wealth based on notional return (box 3) for the years 2017 and 2018 violated property rights and the principle of equality.

Income tax Assessments 2021 and 2022

For the time being, the tax authorities will not impose final assessments 2021 and 2022 if there are box 3 assets (and these do not exclusively consist of bank balances). Provisional assessments will, however, be imposed.

Bridging Tax law from 2023 – 2026

From 2023, the method largely similar to the Box 3 Legal Restoration Act will apply. In short, from 1 January 2023, assets will be calculated using the new calculation method (the three categories). And although the tax-free capital per taxpayer has been increased from €50,650 (2022) to €57,000 (2023), the rate has gone up from 31% (2022) to 32% (2023). This will become as high as 36% in 2024. This may mean that the tax payable in Box 3 increases if your assets consist mainly of other assets and any debts and you have relatively few bank deposits.

If your assets consist mainly of bank deposits, then the new rule is likely to be more favourable to you. For completeness, starting from the year 2023, you no longer have a choice and the most advantageous calculation method (as for 2020 and 2021) will not be applied! It is therefore important that you look carefully at the composition of your assets. In common situations, it is wise to apply for a provisional assessment 2023 or 2024: you can then pay the tax due in instalments, instead of in a lump sum. This will also allow you to save tax interest, as this has also risen in the meantime.
Incidentally, it is quite possible that this Bridging Act will also be subject to litigation.

Actual return on investment

Actual return includes directly received income such as interest, dividends and rental income. It also includes realised changes in equity, such as sales results and capital gain on shares and real estate. It is not yet clear whether unrealised changes in equity, such as changes in the value of shares and real estate, are also included. Proceedings on this issue have led to different outcomes from the courts and tribunals. In some proceedings, decreases and increases in value were taken into account and in others, unrealised changes in equity were not. The Supreme Court has yet to give a final opinion on this.

What to do ?

Have you recently received a (final) assessment with box 3 tax or will you receive one soon? And are you of the opinion that the application of the lump sum still leads to an unfavourable outcome and/or the actual return is lower? Then submit an objection to the assessment within 6 weeks of the date. Of course, we can assist you with this.

If you have already received an assessment and have not filed an objection within these six weeks, and you believe that the actual return was lower, a request for a deduction, so-called ‘ex officio reduction’ can be submitted within five years after the end of the calendar year.
Note: for the year 2018, the tax authorities must receive such a request before 31 December 2023. A side note here:

If the assets for the years 2017 to 2021 in particular consisted of other assets and/or debts, then usually the old calculation method is more favourable than the legal adjustment (‘savings variant’).
If the actual return was lower, you can file an objection or request for a deduction, so-called ‘ex officio reduction’. Note that a request for ex officio reduction must be justified. This means that you must prove that the actual return was lower than the so-called “benefit from savings and investments” as stated on the assessment.

Actions?

Do you want to object or submit a request for a deduction, so-called ‘ex officio reduction’? If so, please let us know before 1 December 2023 at tax@aame.nl. In that case, we kindly ask you to provide the necessary information, such as interest actually received, dividends, rental income, sales proceeds and a statement of changes in assets. Given the ongoing proceedings and the fact that there are multiple interpretations on what constitutes “actual return”, this can be a time-consuming process. Thereby, the question is whether the outcome outweighs the costs of any proceedings.

There are costs associated with our work. These costs depend on the information we already have from you and you (additionally) provide us with. We will ultimately charge the actual time at our hourly rate. Please note, it is then a question of whether the costs outweigh any refund to be received.

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