Box 3 is a tax category in the Dutch tax system designed to tax income from capital assets (such as savings accounts, investments, properties other than primary residences, etc.). Until recently, the main issue was how returns on these assets were calculated. Taxpayers were taxed based on a notional return, rather than their actual returns. This approach was considered unfair, especially when actual returns were lower than the estimated returns, or even negative.
(A) Issue with Notional Return Calculation in Box 3
Fixed Return vs. Reality:
The system used a fixed return rate based on market assumptions, which often did not reflect actual returns on assets. During years of low interest rates, many people ended up paying taxes on income they did not actually earn.
Discontent and Legal Challenges:
Many taxpayers saw this calculation as unfair and took the matter to court. In 2021, the Dutch Supreme Court ruled that the notional return system in Box 3 violated property rights and taxpayer equality.
Temporary Adjustment in 2022:
Following the court ruling, the Dutch government introduced a temporary adjustment in 2022, allowing returns to be calculated based on current interest rates for low-risk assets (such as savings) and differentiating these from higher-risk assets. However, this was seen only as an interim solution.
(B) Box 3 Reform: Implementing Actual Returns
The Dutch government plans to replace the notional return calculation in Box 3 with a system based on actual returns. The goal of this reform is for taxpayers to be taxed only on the returns they truly generate from their investments and savings. Key points of the reform include:
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Calculation Based on Actual Returns:
The new structure will tax only income that is actually generated (interest, dividends, rent, etc.) and capital gains. -
Gradual Transition:
The government will continue using a temporarily adjusted method to calculate returns during the transition, aiming to better reflect market performance. -
Fairness as a Goal:
The reform seeks to be more equitable, providing greater transparency and fairness in taxing capital income. It also aims to protect savers and small investors who may not always earn high returns.
This transition aims to make the Dutch tax system fairer and more aligned with economic realities, addressing taxpayer demands and court rulings.
(C) Implementation in 2024 and 2025
Between mid-October and early November 2024, the Tax Authority will send a letter to eligible taxpayers informing them about their actual return. The letter will provide details about the additional adjustment process and the Actual Return Declaration Form, which will be available starting in summer 2025. This guide will explain how to compare actual returns with notional returns and will include three calculation examples.
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From October 2024:
Eligible taxpayers will receive a letter with detailed instructions and information about the process. -
From Summer 2025:
Taxpayers will be able to use the form to declare their actual return. For each applicable year, a specific letter will be sent. To prepare, a list of necessary documents and data will be provided.- If the actual return is lower than the previously calculated notional return, you will need to submit the form. You will then receive a message explaining what this means for you.
- If the actual return is higher than the previously calculated notional return, you do not need to submit the form, as you will not owe more taxes than initially calculated, even if you submit the form by mistake.
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By Late 2025:
From late 2025, actual returns will be used to calculate your income in Box 3 if they are lower than the notional return. You will receive a notification with the final resolution, which could result in a refund or tax reduction.
Source: Belastingdienst, Rijksoverheid

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