Do you need tax advise on how to minimize wealth tax in your international living or job situation? Are you (considering) moving to the Netherlands and want to understand wealth tax implications. Or is your 30% ruling ending and do you have worldwide assets? Check the example situations or submit your own situation to us directly. One of our advisors will give you a detailed response and let you know how we can minimize your Box 3 tax obligations.
What is Box 3 tax actually?
The Dutch capital gains or wealth tax is in fact nothing more than the tax on fictitious income from savings and investments; the so-called Box 3 tax, although ‘under construction’. The reference date for taxed box 3 assets is January 1. A recent development is that due to a High Court decision on box 3, the tax authorities have confirmed that no box 3 tax assessments will be raised for the time being. We would not advise taking any action with regards to saving on box 3 taxation until there is more clarity as to how the Box 3 tax will work out. The High Court concluded that the fictitious return on investment often leads to a relatively heavy financial burden, especially if taxpayers’ assets are mostly savings.
End of 30% ruling
When your 30% ruling ends you become regularly taxable in the Netherlands for your worldwide wealth (Box 3 tax) and you will have to declare these in your tax return. Make sure you do this properly to avoid high fines. In case you are still under the 30% ruling but have not opted for partial non-domestic taxation you will also have to declare your (worldwide) assets in box 3. Dutch real estate (not the owner-occupied first dwelling) is always taxable, also during the 30% ruling period. We do recommend double-checking if you have correctly opted for partial non-domestic taxation since a mistake can be easily made. In case you forgot to opt for partial non-domestic taxation we can check what tax obligations you have.
Not the entire box 3 capital is taxed. In 2022, the first €50,650 (double for tax partners) will be exempt. This is called the tax-free allowance. In 2021 this was still €50,000 (€100,000 for partners). Anyone who saves green and/or invests green is eligible for additional tax-free capital of €61,215 (2022).
Box 3 tax rates
In 2021, the rate on the notional return in box 3 has been increased to 31%. This rate will not be adjusted in 2022.
Below is a schematic representation of the box 3 tax in 2021 and 2022 with 4 categories of wealth bases.
From 2017, a statutory regulation was introduced, changing the fictitious or fixed return. Already since 2017, the actual return that people achieve on their net wealth (excluding the equity capital on their own home) is not relevant. Box 3 has three rate brackets. However, the Tax and Customs Administration assumes that wealthy people also invest a lot. This means that, depending on the size of the wealth, it is assumed that part of the wealth is saved and part is invested (the so-called ‘asset mix’). The return that is expected to be achieved for both capital elements has been laid down by law (the fixed amount). This does not take into account the actual choice of taxpayers or the actual return. According to the tax authorities, investments yield much more, so in the fictitious world of the tax authorities, wealthy people in The Netherlands normally invest 33 to 100 percent of their wealth in shares, investment funds, or real estate. There is as yet no prospect of taxation on the wealth in box 3 over the actual income.
Saving tax in box 3
The reference date for taxed box 3 assets is January 1, so you need to make sure the amount is as low as possible on that date. Here are a few tips to reduce your assets in a smart way before 1 January next year. It is recommended to have an expert tax consultant check which of these or other options apply to your situation:
- If you have substantial assets, it could be an option to set up an OFGR or BV to save box 3 tax;
- Make a gift to a relative or non-relative that will be used for the purchase, repayment, or renovation of a home that is or will be a primary residence. Till 2024 an amount of approx. € 106.671.is free of gift tax;
- Use your savings to pay off part of the mortgage on the primary residence (box 1). In addition to wealth tax, this often also saves you some mortgage interest;
- Deposit money into an annuity.