Intended box 3 adjustments are cancelled!

On Budget Day (Prinsjesdag) 2019, the cabinet announced that the current wealth tax system remains the same in 2020 and 2021. But they came up with an idea to change the system completely from 2022, according to this proposal. Former Secretary of State Menno Snel came up with the idea that has to make the wealth tax, in box 3, fairer. The new proposal aimed to distinguish more between savings and investments. In this scenario, investments would be taxed more heavily than savings.

In 2019, your assets consisted of your possessions minus your debts. If your assets were less than the tax-free threshold of € 30,360, you did not have to pay box 3 tax. If your assets were higher than the threshold, you paid box 3 tax on assets over € 30,360.

Belasting box 3

Effects of the proposal

The proposed reform of the box 3 tax would mean that about 1.35 million people no longer have to pay taxes on their savings in box 3. Currently, 2.9 million people are still paying this tax. The plan was to stop taxing the first € 440,000 (average interest) people have in savings.

Also, this new proposal was arranged in such a way that small investors (under € 30,000) won’t have to pay tax in 2022, just like now. For those who have to pay asset tax, the rate will be approximately 33%.

My predecessor’s proposal faced major problems.

This said Vijlbrief on June 23, 2020, the day he announced that the plan had been cancelled. His reason was that the difference between taxes that people shall pay on their return on investments was going to be too big compared to what they shall pay on their savings.

What is going to happen now?

Vijlbrief indicates that the only right decision will be to tax the real rate of return. Unfortunately, this is not achievable. The reason for this is that the Belastingdienst can not check the exact real rate of return and, therefore, cannot tax this. Because of this, the Secretary of State is looking for another solution. 

He is going to look for a solution that will benefit both small savers and investors. Now the individual tax-free threshold is still € 31,000, but Vijlbrief says that he is seriously considering raising this threshold.