“Box 3” is not the third gift in a pile of Dutch presents – but it could be. Over the past years, the Dutch tax system has become extremely complex and based on an increasing number of assumptions and exceptions. But after a series of court cases, the government has admitted it needs reform.

In the meantime, one of the injustices of recent years is being reversed in what is known as “Box 3”: the wealth tax applied to your income from savings, shares and investment property.  Unlike many other countries, the Dutch taxman had relied on “fictitious” assumptions of wealth that would also take account of their increase in value, since the Netherlands opposed a normal capital gains tax.

But, since the courts have ruled that this infringes European property rights if people are overtaxed, from this summer you can claim back overtaxed Box 3 income.

“The tax office is working on the process that will be available around the summer, so that you can offset the income that you have in a year against the fictional calculation based on the value on January 1^st – which is what the tax office has been using,” said an expert from Blue Umbrella. “You will be able to choose.”

Whole box

You will be able to give a report of the actual amount of money that you made, for example, with interest from your bank accounts, dividends from shares and income from property, for previous years. You can go back to 2021, and possibly also for previous years depending on when you received the tax office’s definitive statement of your tax.

A spokesperson from the Belastingdienst Dutch tax office confirmed that if you do decide to challenge the calculation of Box 3 tax from a particular year, you need to do this for the whole of the box – your savings, small share holdings and any investment property, rather than just one of these elements. The Blue Umbrella expert said that this makes it more complex because elements like stocks and shares may have been under taxed with the fictitious ruling. “If you want to protest one thing, you will have to protest them all,” he said.

Many people file their tax with a financial partner, which means that assets can be divided in order to take the most advantage of tax bands. If one fiscal partner decides to challenge their box 3 tax, it may be possible to redivide the share of the assets and refile the taxes to take most advantage of the new rules.

A spokesperson from the Dutch tax office said it was difficult to give generic advice, but the same rules apply as normal about redividing assets before a tax return has been ruled definitive for a certain year. “The situation from everyone who is obliged to pay tax is unique,” said the spokesperson.

Documents

Blue Umbrella will be setting up a dedicated team to deal with people who want to challenge their box 3 tax because they believe that they have paid too much in previous years. But – be warned – the process is not for the faint hearted. You may need to go through a lot of documents yourself to find the actual gain that you made.

“If you’re in a hurry to make your appeal, this is not going to be easy,” said the Blue Umbrella expert. “The tax office is not yet open for it! You also have to provide a lot of documents, for all of your stocks and the capital gain in every transaction and the actual yield of every asset.”

The good news, however, is that you will still be able to take advantage of the box 3 threshold where the first € 57.000 of your income (in 2024) is tax free – but the example pages from the Belastingdienst shows that the calculations can get complicated.

“If you have a lot of money in an investment account, the market might be doing better than the fictional calculation, so when you invested in stocks you probably made well more than 6%,” said the Blue Umbrella adviser. “But if you invest in property and had limited rental income, it could be wise to do it.”

If you do have property income, you will not be able to deduct any maintenance costs for the actual calculation – unlike the situation in some other tax jurisdictions – but if you rented out a property that comes under the new legislation for “mid-level” rents, or at a lower rate to a long-term tenant, challenging your tax in the past might be beneficial.

“Everybody should decide for themselves if they want to appeal,” said the expert, “but we will set up a service to help.”

Find out more about how Blue Umbrella can help you by contacting the team