The current box 3 system in the personal income tax is based on the following 3 asset categories, each with its own fixed return:
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Bank balances
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Other assets (including investments and real estate)
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Debts
The Supreme Court of the Netherlands recently ruled that when the actual return on the box 3 capital is lower than the notional return, the box 3 tax may be calculated on the basis of the lower actually achieved return.
The Supreme Court indicates that when determining the actual return, the entire capital (including bank balances) must be included in box 3, without deduction of the tax-free capital (2024: € 57,000 per taxpayer).
According to the Supreme Court, the actual return consists of:
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All regular income (e.g. interest, rent and dividends) in the tax year.
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The realized value developments in the tax year.
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The unrealized value developments in the tax year.
Costs are not deductible. Interest costs on debts that belong to the box 3 capital are deductible.
When determining the return in a year, positive or negative returns in other years are not taken into account.
It is up to the taxpayer to demonstrate that his actual return is lower than the fixed return. If the taxpayer can prove this, he will receive legal redress.
We also note that the Supreme Court has indicated that the current box 3 system is sufficient for taxpayers with only bank balances in box 3. These taxpayers therefore cannot obtain legal redress on the basis of the Supreme Court's ruling.
In an initial response, the Secretary of State indicates that he needs approximately 8 weeks to study the Supreme Court's ruling. He will then indicate which options have been explored and where any problems remain. The intention is that a successful solution will then be found by the next cabinet.
Taxpayers for whom the Supreme Court's ruling has consequences will receive a letter from the Tax Authorities. According to the Secretary of State, they do not have to do anything and will be informed as soon as there is more clarity.
The Tax Authorities are expected to provide a digital form to substantiate the actual return in a tax year. We will of course keep a close eye on the above.