You’ve probably heard about it many times, the tax rules for box 3 have changed dramatically. In this newsletter you can read what this could mean for you.
In 2001 taxation of income from assets was introduced, based on fictitious returns (taxation in box 3). Instead of looking at actual returns, a fictitious return of 4% was assumed, on which 30% tax was due. In the early days, it was relatively easy to achieve a return of 4% or more. Even in bank accounts, a 4% return was easily achievable. Because many people achieved higher returns than 4%, and therefore paid relatively little tax, box 3 was also called the fun box.
Over the years, the interest rate on savings decreased to a level of about 0%. This led to many lawsuits from taxpayers who felt that taxation in Box 3 on unearned returns was unreasonable. After several lost lawsuits, the Supreme Court ruled in the 2021 Christmas ruling that taxation of savings, based on the rules of the box 3 system, is no longer legally tenable. Since then, the taxation of savings has been adjusted, with a notional return for savings based on an average market interest rate. For 2023, for example, a notional return of (provisionally) 0.36% is assumed. This (largely) solves the problem for savers.
As of 2023, major changes have again been introduced to the levy on income from assets. A relatively low return is assumed for savings, but a relatively high return of over 6% is assumed for other assets. Debts are no longer netted, but are offset against the return on savings and other assets at a certain “rate of return.” Without going into the details, for taxpayers with assets (other than savings) the changes result in a significant increase in the tax burden on assets. Especially for property owners, the changes have a negative effect. A doubling (or more) of the payable box 3 tax is no exception. We refer owners of real estate to our article on the tax consequences of the changes to the box 3 tax rules for real estate.
What to do next?
In the first place, we advise you to file an objection (or have it filed) against the income tax assessment, if you believe that the taxation of your assets is too high. This will preserve your rights. If you want Poundwise to object to the assessment, it is important that we receive the assessment within 6 weeks after it has been issued. There are costs associated with the objection procedure. Secondly, it is a good idea to have us assess the consequences for your situation. Then we can think along with you about possible solutions to relieve the tax burden.
Jan Jan Jansen
Tax Lawyer/divorce advisor