Box 3 is considered as one of the most unclear/unfair sections of the Dutch income tax system, which has been subject to a lot of discussion and Court cases over the recent past years. In an attemt to make the situation a bit more understandable, we listed a simplified history of the Box 3 tax system (taxation of savings and investments) - starting in 2017,  when a revised system was implemented.  Note that this 'in a nutshell' version does not contain details that may be very relevant in specific situations.

As per 2017, a low deemed result rate was determined for cash and savings and a high deemed result rate for all other investments. According to this method, the result from assets would increase (in steps) as the wealth increases based on the assumption that one will invest more in case one owns more.

On December 24, 2021 the Surpreme Court decided that the 2017 version of the Box 3 system was contrary to the right of ownership and the prohibition of discrimination. The Surpreme Court decided that the actual result should be considered rather than a deemed result.  

The Dutch tax authorities came up with a fix in which the high and low result rates (which are annually adjusted) would still apply, but where these would be applied to the actual share in wealth that was in cash/savings versus the share that was invested.

This fix was diverted into the revised Box 3 method in the Dutch Tax Act as per 2023.

On June 6, 2024 the Surpreme Court decided that the revised 2023 method was in some situations still a violation of human rights and that for investments, the actual result from investments should be considered if the actual result is less than the deemed (based on the determined high result rate for investments) result. 

The Dutch government is currently working on the details. At this point it is clear that the above should be considered over the full investment portfolio and that for actual result, apart from direct income (interest/dividend/rental income), also (un)capitalized gain will be considered.

It is expected that in July of 2025, the details should be clear. As of that moment, the Dutch tax authorities will issue (pending) final tax assessments and at that point, objections can be filed against assessments in case the actual income from investments is less than the deemed result. A letter of objection should contain an overview showing the incresase and substantial proof (documentation etc).

Feel free to contact us in case you want to learn more