Measures in income tax box 3

Box 3 - Christmas Eve ruling

In December 2021, the Supreme Court of the Netherlands ruled in the renowned Christmas Eve ruling that, in certain cases, the ‘Dutch box 3 income tax system’ is contrary to European law, which must be remedied. In this, a distinction is made between the past (2017 to 2022), the transitional period (2023 to 2025) and the future (2026 and later years).

Limitation of judicial remedy of box 3

The proposed Judicial Remedy of Box 3 Act applies to assessments for income tax/national insurance contributions for the years 2017 to 2022, provided that they are not irrevocably established.

• Take note! The tax inspector is not allowed to apply the Judicial Remedy of Box 3 Act if this means the taxable person is required to pay more income tax.

New capital yield tax base

In the new calculation of the capital yield tax base in box 3, gains from savings and investments are based on the actual composition of the capital. Three categories of assets are distinguished: bank account credit balances, other assets and liabilities. For each asset category, a specific fixed capital yield rate is proposed that is as close as possible to the actual yield.

Calculation of new gains from savings and investments

Yields to be calculated by multiplying the applicable fixed capital yield rate by the value of the assets in the relevant category (after deduction of the debts threshold) on the 1 January reference date.

Capital yield rates for the new calculation by category:

The rates for categories I and III for 2022 are not yet known.

The tax-free assets of the current ‘Dutch box 3 income tax system’ remains in place. Since the new calculation is based on an actual (instead of a fixed capital yield) assets mix, the question arises as to which asset components the tax-free assets should be deducted from. It is therefore proposed to multiply the effective fixed capital yield rate in the three asset categories by the capital yield tax base, to determine the new gains from savings and investments, after it has been reduced by the tax-free assets.

Distribution of combined tax base

Since the level of the combined income components may have been altered by the judicial remedy and the method of distribution as a result of the judicial remedy – by corresponding with the distribution chosen by the tax partners – may deviate from current legislation, and this may possibly be unfavourable for the taxpayer, the proposed legislative text allows tax partners to choose a different distribution in respect of the additional deduction. To this end, they may apply to the tax inspector for an official reduction, or – for the years 2021 and 2022 – submit a new tax return in which they make their joint choice known.


Transitional Income Tax Box 3 Act

In line with the box 3 judicial remedy, for taxation in the years 2023 to 2025, the actual composition of the assets is used. For every asset category (bank account credit balances, other assets and debts), a separate fixed capital yield rate applies.


Box 3 fixed capital yield rates known for 2023

In 2023, a fixed capital yield of 0.01% will be applied for bank account credit balances. For other assets, this fixed capital yield rate will be 5.69%. The fixed capital yield rate on debts will be negative 2.46%.

• Take note! The total capital yield in box 3 amounts to at least nil.

Exemption on green investments is maintained

The new ‘Dutch box 3 income tax system’ will also exempt green investments up to a certain maximum amount. In doing so, a distinction must be made between green investments on bank account credit balances and other green investments. The exemption must first be allocated as much as possible to other green investments.

• Take note! The allocation of the exemption to other green investments is favourable, since bank account credit balances are subject to a much lower fixed capital yield.

Reference date arbitrage

Without further measures, taxation in Box 3 under the Transitional Income Tax Box 3 Act can be easily reduced by selling investments just before the reference date. The proceeds are then temporarily deposited into a bank account. It is for this reason that such a sale is ignored if it occurs in a connected three-month period starting before and ending after the reference date.

• Tip! The measure does not apply if the taxpayer makes it plausible that they have acted for commercial, non-fiscal reasons.

Rate increase

From 2023 to 2025, the Box 3 rate will increase by 1 percentage point annually. The rate will therefore be 32% in 2023, 33% in 2024, and 34% in 2025.

• Take note! The government does not expect many people to transfer assets from box 3 to box 2. Yet, box 2 has also been adapted to make it no more attractive than box 3.

Increase in tax-free assets

Tax-free assets are being increased from € 50,650 to € 57,000. For partners, tax-free assets are being increased from € 101,300 to € 114,000.