Declaration of actual return

Taxpayers whose actual return is lower than the fictitious return may now choose to report their actual return to the Tax Office by submitting a ‘declaration of actual return’. The actual return must be substantiated and specified for each individual asset category. Preparing this declaration requires an extensive analysis of your assets, as both the income received and the realised and unrealised capital gains for each asset category must be calculated.

For certain categories of assets, fictitious assumptions still apply — for example, the WOZ value and the vacancy value (‘leegwaarderatio’) for rented properties. The precise application of the rules has not yet been fully clarified in several respects.

Application per asset category

For each category, different rules apply:

• Bank and savings deposits: Here, the actual interest income you have received is considered. This requires an overview of all accounts and corresponding statements. If the account is in foreign currency, transactions during the year must be converted into euros in order to determine the foreign exchange result.
• Investments (shares, bonds, investment funds, etc.): Here, both dividend and other income and realized and unrealized capital gains (or losses) must be determined. This means that all purchases and sales of securities must be recorded, including transaction dates and values. If the account is in foreign currency, transactions during the year must be converted into euros in order to determine the foreign exchange result.
• Real estate (excluding your own home): For rented property we must calculate rental income as well as any (realized and unrealized) value changes. Specific valuation rules also apply here, such as the vacancy value ratio (leegwaarderatio) and WOZ-value (official property valuation). In case of changes during the year, such as purchase or sale, changes in value are calculated on a proportionate basis.
• Receivables and debts: Interest income or expenses must be recorded here, as well as any repayments or value changes. If foreign currency is involved, the foreign exchange result must also be determined.
• Other assets: This includes, for example, cash, crypto assets, or valuable possessions. Correct valuations and income must also be determined for these in accordance with the applicable regulations.

These calculations are labour-intensive and require careful substantiation with documentation and supporting evidence. Bank statements, annual statements, securities reports, WOZ assessments, and other relevant documents will therefore need to be collected and included in the declaration.

For which years

The Declaration of actual return may be submitted for all years for which the tax assessment had not become final and irrevocable at the time of the Supreme Court’s ruling of 24 December 2021. In addition, it applies to years in which an objection was filed against the final assessment and for which a request for reassessment was submitted within the five-year period. Since it is possible to choose between the fictitious return and the actual return each calendar year again, there are often opportunities to optimise the tax burden.

In practice

If the WOZ value of a second home or holiday home has increased substantially, a reduction will in most cases not be possible. This also highlights the importance of the WOZ value: if it has been set on the high side, this is an additional reason to file an objection against the annual municipal assessment in which the WOZ value is determined. The same applies to an investment portfolio: in the case of a significant increase in asset value, the fictitious return will likely be more favourable, and vice versa. Naturally, the final outcome depends on the complete picture per year including other asset categories involved.