Did you save a lot of money in recent years, did you recently buy a second house or would you like to build up more capital? If you reach the tax-free capital threshold, you will have to pay tax in box 3. Therefore, it is wise to read more about the tax treatment of your assets (box 3). This can affect the development of your assets and how much it costs you. Good to know that the box 3 taxation has changed in 2021. According to the planning, a capital gains tax system will be introduced in 2025 or 2026.
Box 3: income on savings and investments
The Dutch tax system contains three ‘boxes’. It is important to know that your assets are taxed in box 3. Box 3 has a different taxation system than boxes 1 and 2. In boxes 1 and 2, tax is levied on the income actually received and profit respectively.
Until 2021: notional return
Until 2021, box 3 calculates a notional return on your capital. This notional return is taxed against 31% in 2021. The tax authorities assume that the more capital you have, the more returns are achieved. There are three categories:
- Assets up to € 50,000. In the first category, you get a return of 0.03% on 67% of your assets and a return of 5.69% on the remaining 33%.
- Assets from € 50,000 to € 950,000. On the second write, you get a return of 0.03% on 21% of your assets and a return of 5.69% on the remaining 79%.
- Assets from € 950,000. On the third write, you get a return of 5.69% over 100% of your assets.
You pay 31% tax on the notional return in 2021.
From 2021: bridging legislation based on flat-rate savings option
The Dutch Supreme Court ruled that the taxation on savings and investments in box 3 must change. For coming years, the box 3 income is calculated based on the flat-rate savings option. The amount is still based on a fictitious return, but based on the actual composition of assets, broken down into three categories:
- Savings will be taxed on the average interest rate on savings in the year of question
- Debts are linked to the market mortgage rate
- Other assets are based on the long-term average return for investments
The flat-rate saving option is just a temporary solution until the Duch tax authorities have set up the capital gains tax system (probably in 2025 or 2026).
Box 3: income on savings and investments
How do you determine your capital? In order to answer this question, you need to look at what your assets are and what the cohesive debts are. Leave your details in our online contact form or call us at +31 (0)20 – 2170120 and we will get in touch to see if we can help you with filing the tax return.
Assets
Debts
- A negative balance in a bank account
- Mortgage debts on a second house
- Debts according to the Student Finance Act (student debts)
- Amount of the personal budget that you must repay
- Inheritance tax
- A debt arising from a donation on paper
How do you determine the value of your assets?
You use the market value. This usually means the sales value. If that is not possible, then you have to estimate. The reference date of the assets (both assets and liabilities) is January 1 of the year of declaration.
Tax-free capital
Part of your assets is exempt from tax. The amount of this tax-free allowance is €50,000 in 2021. Do you have a tax partner? Then this tax-free allowance will double to €100,000.
So, for the calculation of the tax, you first have to calculate the assets and liabilities. You then deduct the tax-free portion thereof and what remains will be used as the tax base.
Do you have a large capital that consists of savings?
If you have a lot of savings, it is advisable to place these savings in a Besloten Venootschap (Private Limited Liability Company). The actual return received from the savings in the bank is often a lot less than the notional return with which box 3 works. This results in the fact that you pay more tax on your savings than you actually earn with them.
What is the advantage you get from moving the savings to a private company? In this case, your actual return is taxed instead of your notional return. A tip is to use the full tax-free capital in box 3 and to place the remaining savings in a BV.
We help with box 3 taxation
Speak directly with one of our tax advisors
Do you have questions about the box 3 taxation? Or other tax-related questions? We are happy to help. You can contact us using the details mentioned below.
Fill in our contact form, and we will get in touch
Send your message to +31 20 – 2170120
Call us on +31 20 – 2170120