February 22nd, 2022
On December 24th, 2021, the Dutch Supreme Court decided on a massive objection procedure against the current tax regime in respect to personal savings and investments
As a result, this box 3 system will be amended. The government wants to amend the system by introducing a capital gains tax by 2025, whereby taxation is based on the actual income from capital. It is decided by decree of the State Secretary (effective as of July 1st, 2022) that the rights of concerning taxpayers will be restored in the tax years 2017 – 2022. Kindly note that the statutory law and rates for box 3 also apply. The taxpayer can choose which system is more beneficial.
Furthermore, bridging legislation will replace the current box 3 system for all taxpayers in the years 2023 – 2024 until the new box 3 system will be implemented in 2025. The restoration of rights as well as the bridging legislation will be based on the so-called fixed savings variant.
The following overview will be discussed in this article:
- Fixed savings variant
1.1 Restoration of rights (2017 – 2022)
1.2Bridging legislation (2023 – 2024) - Capital gains tax (2025)
Fixed savings variant
The restoration of rights as well as the bridging legislation is designed by means of the fixed savings variant (Dutch: forfataire spaarvariant). Under this system the box 3 capital per taxpayer is divided into three categories: savings, other assets and debts. The savings rate is based on the average interest on savings. The rate for other assets is based on the weighted average of the multi-annual average returns on bonds, equities and real estate. The debts rate is based on the average interested on outstanding mortgage debts.
Each category has its own flat rate on return. In other words, a fictitious percentage of return that is deemed to have been achieved with the capital. This return serves as the basis for taxation in box 3. Please note that these percentages determine the basis of the box 3 capital, but not the taxation rate. After using these percentages to calculate the fictional return, this base is subject to box 3 taxation based on the following rates: 2020; 30%, 2021 & 2022; 31%.
Based on the fixed savings variant, the following flat rates are used to determine the box 3 basis:
| Savings | Other assets | Debts | |
| 2017 | 0,25% | 5,38% | 3,43% |
| 2018 | 0,12% | 5,38% | 3,20% |
| 2019 | 0,08% | 5,59% | 3,00% |
| 2020 | 0,04% | 5,28% | 2,74% |
| 2021 | 0,01% | 5,69% | 2,46% |
| 2022 | TBA | TBA | TBA |
For the application of this fixed savings variant, a distinction is made between:
- Restoration of rights (2017 – 2022); and
- Bridging legislation (2023 – 2024)
Restoration of rights (2017 – 2022)
Restoration of rights means that taxpayers will be reimbursed for previously unlawfully levied box 3 taxation. However please note that for these taxpayers the box 3 taxation is only retroactively reduced if the box 3 base under the fixed savings variant is lower than the base as calculated under the previous box 3 system. Therefore, the fixed savings variant will only be applied if it is more beneficial for the taxpayer.
Restoration of rights is per tax year offered to the following three groups of taxpayers and only applicable for income tax assessments in the tax years 2017 to 2022.
- Taxpayers who have submitted a notice of objection against the income tax assessment timely for that calendar year, or the taxpayers whose objection was a designated part of the massive objection procedure against the box 3 system.
- Taxpayers with an income tax assessment containing a taxable box 3 base:
- which has not yet been irrevocably finalized before December 24th, 2021 (date Supreme Court ruling); and/or
- which is established between December 24th, 2021 and July 1st, 2022, without taking into consideration the Supreme Court ruling
- Taxpayers with an income tax assessment containing a taxable box 3 base, which has not yet been established before July 1st, 2022.
From August 2022, it is possible to recalculate the income tax 2021 and to assess whether there is an advantage to be gained compared to the 2021 return that has already been filed. Kindly note that if you have a tax partner, you can allocate savings and investment to each other and use the current statutory law and the newly proposed changes.
If there is no benefit for the taxpayer, the old scheme will still be applied instead of the new variant. Ditto for the tax return 2022. This effectively means that only taxpayers with a relatively large amount of savings are offered a restoration of rights.
Bridging legislation (2023 – 2024)
The bridging legislation will be effective for the tax years 2023 and 2024. There will be no restoration of rights offered for these tax years. Based on the bridging legislation, the box 3 tax will in all cases and for all taxpayers be levied based on the above-mentioned fixed savings variant. Not only if it provides an advantage over the previous system. The independent bill to this legislation will be submitted on Prinsjesdag (September 20th, 2022).
Capital gains tax: 2025
The government intends to shape the new box 3 system by means of a capital gains tax (Dutch: vermogensaanwasbelasting). This means that annually tax is levied on the actual regular income from capital (for example: interest, rent, dividend, price results, value movements and lease), but also on (un)realized value developments of, for example, an equity portfolio. In addition, the development in value of assets is taxed at the time the asset is sold. Initially, the value development of real estate is determined at a fixed rate, whereby the switch is made as quickly as possible to taxation based on the actual return.
The draft bill is expected to be submitted to the House of Representatives before the summer of 2023.
Broadstreet can advise you further how the new tax laws can affect your situation.
