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.
Example situations of declaring assets abroad
You are from the UK and your wife is Dutch. Together you have been living abroad in several countries for the last 8 years and are living in the US now. You own three houses in the UK and your wife owns a house in the Netherlands. You also own some stock options which were already taxed in both the UK and US. You are both working for a US employer. You are considering moving to the Netherlands or to the UK, but are not sure what would be best tax-wise since you have some assets abroad.
If you move you the Netherlands you will become tax liable for your worldwide income (box 1) and assets (box 3). There is no capital gains tax on, for example, shares. Since you have never lived in Since you have never lived in the Netherlands, the 30% ruling is a good option to avoid all box 3 levies for a maximum period of 5 years and to enjoy a 30% tax-free salary. For this, you need a Dutch job offer as a reason for immigration. This can be an offer from a Dutch employer, but also from an existing American employer that, for example, sets up a payroll administration in the Netherlands and can then be seen as a Dutch employer. We are happy to be of service. It is essential that you do not become a resident in the Netherlands before you have arranged a Dutch job offer. The 30% ruling does not apply to your girlfriend as she has Dutch nationality and has not been away from the Netherlands long enough. She may, however, benefit from the exemption in box 3, provided you are tax partners. With the 30% ruling, the Netherlands will undoubtedly prove to be the most favorable tax climate. It might be wise to also check this in the UK.
You are working for an international organization as an ex-pat in the Netherlands. You are not liable for income tax in the NL, but have been filing your taxes anyway for the “wealth tax”. Your American partner is still working for a US company and would like to move to the NL permanently but keep his job. You have a Dutch living together arrangement. You are looking for a reliable tax consulting company who would be able to help us in this situation and, most importantly, avoid him being heavily taxed by both countries once he moves over here.
Since you are working for an international organization it is important you can check if there is an exemption part for declaring your wealth in box 3. If your partner immigrates he will become taxable for his worldwide income and wealth. Double taxation deduction should be looked for in the US as the treaty appoints the right to tax to the country of residence. It would be most advantageous if your partner got an employment offer from an NL employer – which could be the US employer setting up as an NL employer – and consequently immigrate. In addition, this would give scope for the 30% ruling.