The Tax and Customs Administration has published the collective decision in the massive objection procedures against the box-3 tax for 2017 to 2020. All 200,000 objections have been declared well-founded. This does not mean that the participants in the mass appeal procedures now know how much they will get back and when.

There is also nothing known about possible compensation for other taxpayers who have paid too much box-3 levy. According to the cabinet, a box-3 levy based on the actual return cannot come into effect until 2025. However, urgent legislation is currently being worked on, which should provide a solution for the intervening years.

The emergency legislation makes adjustments to the existing box-3 legislation. The cabinet undertakes to send a memorandum of direction for the recovery operation to the House of Representatives before 1 April 2022. The left-wing opposition parties have already announced a private member’s bill that is based on a progressive levy on assets minus debts with a tax-free allowance of € 100,000 per person. The owner-occupied home remains in box 1 and substantial interest shares in box 2. The rate increases from 1% to 500,000 to 5% above € 5 million in taxable capital.

Tax assessments and tax return 2021

The ruling of the Supreme Court also has consequences for 2021 and later years. No final assessments are currently sent to taxpayers with box-3 capital. An exception is only made if there is a threat of prescription or if there is an interest in the taxpayer. As soon as it is clear what the recovery will look like, these attacks will be reinstated. Taxpayers will be informed about this.

The Tax and Customs Administration asks taxpayers to pay the provisional tax assessment 2022, pending further decisions. They are also asked to simply submit the 2021 tax return, stating the box-3 capital. Taxpayers with box-3 capital will probably receive their 2021 assessment later than 1 July 2022, even if they submitted their 2021 tax return before 8 April.

Nowadays, more and more banks have a negative savings interest rate, already from € 100,000 on the savings account. So you no longer receive interest on your money in the savings account, but you have to pay a certain percentage on your savings for storing your money at the bank. There are several ways to avoid negative interest in savings:

1.  Opening additional accounts

With some banks you can have multiple accounts at 1 bank and the accounts are not added together. At other banks, the amounts on different accounts at 1 bank are added together. Spreading your savings over several accounts can be difficult because the banks no longer open a new account for you so easily;

2.  Investing

You can also invest your money; spreading it over many different investments is then advisable, as is engaging a good financial advisor. Depending on your desired risk level, your advisor can select and arrange the right investments for you;

3.  Provide an interest-free loan to your child

You deposit your money up to a maximum of € 100,000 in your child’s savings account. To conclude a written loan agreement in which you indicate that the loan is intended to prevent negative interest at the bank and that you can always reclaim the money now. Extra option: If you pay your child the amount of negative interest saved as a contribution, this is tax-free for your child. Record this ‘interest amount’ in the loan agreement;

4.  Loan to your own BV

Do you still have room in the bank account(s) of your BV? Then lend your private assets to your BV. The condition is that you pay the BV more interest than the bank charges the BV. Your BV then makes a ‘profit’ and it is a matter of business conduct. You can deduct the interest paid by you to the BV in box 1 on the basis of the posting arrangement. In this case, too, you must record this in a loan agreement;

5.  Loan from your BV to you

Do you still have room in your private account, while your BV has to pay interest to the bank? Then borrow money from your BV. The BV must then pay interest to you instead of to the bank. This interest is deductible for your BV. You will then have a ‘debt’ with your BV, but you will receive tax-free interest, which is also deductible for your BV. Your bank balance in box 3 will increase, but so will your debt, so on balance (almost), nothing will be taxed;

6.  Establishing an OFGR or BV

If it concerns a significant amount of capital, setting up an OFGR or BV is also an option to avoid negative interest on savings and high box-3 levies. This is because this is based on the actual return instead of the box-3 tax, whereby an often unfavorable fictitious return is calculated. It might be though that there will be some changes, making an OFGR less favorable;

7. Tax-free gift

If you already intend to make a gift to your child(ren), the negative savings interest may be a boost. You could then possibly make use of the tax-free gift up to 100.000 euros for parents to their children to assist them in buying their first home.

8. Storing your money in a foreign bank account

Storing your money in a foreign account with better interest conditions can also be beneficial. Provided that you do report this money to the tax authorities. Otherwise, there is tax evasion. What you should definitely not do is a so-called ‘Inventive Construction’ abroad to disguise your wealth; this is outright tax evasion and may be punishable by law. The tax authorities are very alert to this and have a special program ‘Hidden assets’. So do not be tempted by malicious advisers who want to persuade you to such illegal construction.

9. Box 3 assets

Do you own box 3 assets above € 100,000? We are happy to look at tax options with you to prevent you from paying negative interest on a savings account.

Have you not declared assets to the tax authorities recently or in the past? Have you teamed up with an advisor who has set up an inventive construction for you (as described above)? Do you want to make a clean sweep? We are happy to guide you based on our many years of experience.

For many expats the 30% ruling may cease by the end of this year as the transition period for those originally with an 8 year duration is discontinued. It is important to check the situation and possibilities to minimise the tax consequences.

Is your 30% ruling ending? Do you have worldwide assets? Contact us now to see what your tax saving possibilities are.

30% ruling end

Prior to 2019, the 30% ruling period was 8 years. As of January 2019 the period was shortened to 5 years. A two-year transition period was implemented lasting until January 1st 2021. This means that:

• For anyone granted the ruling between January 1st 2011 and January 1st 2013 the 8-years still count, ending between January 1st 2019 and January 1st 2021;
• those granted the ruling between January 1st 2013 and January 1st 2016 will be able to receive the allowance until 31 December 2020, giving them up to an additional two years following the extension;
• anyone granted the ruling after January 1st 2016 will be eligible for the 30% ruling benefit for 5 years

30% ruling is ending as of January 2021

This means that for many international workers their 30 % ruling is ending as of January 2021. If you are one of them, it is important to be well prepared for the consequences. Not only will your take-home salary become lower, but you will also need to start thinking about your wealth and what this will mean for your tax return.

Without the 30% ruling, you can no longer opt to be considered a partial non-domestic taxpayer. In other words, you will be treated as a full resident tax payer and you will need to state your worldwide assets in your Dutch tax return. It is important that you are well prepared for this change and seek tax advice.

“Take this example from an international from Greece who’s 30% ruling period will end January 1^st 2021. From then on she will no longer be able to opt for non domestic taxpayer; that means she becomes taxable in the Netherlands for her worldwide assets. Since she has savings in Greece she will have to pay box-3 tax in the Netherlands. Our tax consultants can help her structure things in such a way to reduce her tax liability. One of the possibilities we would be looking at is to reduce her box 3 tax liability by using her savings to repay part of her Dutch morgage. Although in that case she would receive less mortgage relief it would als lead to reduction of payable mortgage interest. And she would have less savings and thus as a reduction in box 3 taxation.”

Tax on assets and foreign real estate

This year the threshold per individual is € 30,846 before the asset tax starts. Your assets of between €30,846 and € 103,643 are taxed at 0.54%; assets of between €103,643 and €1,036,418 will be taxed at 1.27%; and anything over that at 1.6%. Given these fixed amounts of tax are unrelated to the actual income your assets generate, the higher your income, the more tax efficient you are. But they are still amounts which have to be found and paid.

You also need to include foreign real estate in your tax return and request a deduction for double taxation. In most Dutch tax treaties, the taxation of real estate is always allocated to the country where the property is located.

Avoid a large fine

It is really important to be honest and fill in your tax form correctly. The Dutch tax office is particularly hot on foreign bank accounts, and you can be fined up to 300% of the unpaid tax if you forget to mention them.’

If you would like to find out more about maximising your tax efficiency and decreasing your risk of fines, please feel free to contact Suurmond Tax Consultants www.suurmond-taxconsultants.com .