Here is what we now know about BOX3
Taxes in Box 3 is a topic that has been in the news a lot lately, which has led to a lot of questions being asked. In this news, we will discuss the most important facts. Information related to the concept of the fund 3.
The concept of taxation of assets: all assets “capital” included (cryptocurrency, stocks, real estate), minus your debts. The Dutch Tax and Customs Administration assumes that you generate taxable return from this capital, for example interest, dividends on shares or income from rent.
✨This will change through the so-called ‘Box 3’✨
🟢 Capital exempt from taxes:
As of 2021, the tax-free share capital is set at €50,000 for individuals and €100,000 for financial partners. The Dutch Tax and Customs Administration always uses January 1 of that year as the reference date. Suppose your capital as an individual is above 50,000 euros on January 1, 2021, in which case you must state this in your 2021 tax return.
🟢 Historical Concept of the Tax Authority on Capital and the “New Supreme Court Decision” through Fund 3:
In the Netherlands, capital taxes are not (or were in fact) based not on the total amount of assets, but on what is called your asset return. When calculating this wealth tax, Tax and Customs Administration uses a “supposed return on net capital,” also known as a notional return. However, just before Christmas, the Supreme Court ruled that the Dutch government should not use a default return. As a result of the current low interest rates, the actual earnings of people with relatively more savings are much lower, so that their tax bills are higher than the return. According to the Supreme Court, this goes against the right of property and the prohibition of discrimination, because everyone has the right to choose what to do with their assets. So the Supreme Court ruled that only the actual return could be taxed.
🟢 The things we know so far about Fund 3 and the effect this has on taxes on your capital:
☑️ Citizens with savings and/or investments will temporarily not receive a final assessment from the Dutch Tax and Customs Administration.
☑️ The Netherlands Tax and Customs Administration intends to correct all assessments that are not yet completed in a “proactive manner”.
☑️ The Dutch Tax and Customs Administration is currently investigating the consequences of all assessments, which are considered final.
☑️ In the 2022 provisional assessments, any Box 3 taxes are still processed the old-fashioned way. The final evaluation 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, Fund 3 will be taxed on the basis of the actual return and not the “hypothetical” it used to be. This is something that has not yet been detailed in the Supreme Court ruling. So it is impossible to know what the review will actually yield or cost.
🟢 Note: More information about Fund 3 will be shared in subsequent publications.