Today (December 30, 2014) I read a tax tip in the news paper, that you should take as much money as you can from the ATM machine before the end of the calendar year. The result will be a lower bank balance, which results in a lower tax burden for your wealth taxation. A rather silly article, because taking out EUR 1000 from the ATM saves you EUR 12 in tax, but you do carry a risk of EUR 1000 in your pocket walking home. What is a better tip?
Reduce Box 3 tax tip
Pay your tax up front
If you would like to save on paying wealth tax in Box 3, that implies you are liable for this tax. You exceed the threshold. The most simple, legal and accepted method to save tax is by already paying this tax up front.
You own in taxable assets EUR 100.000, hence you need to pay EUR 1.200 in Box 3 tax. Ask the Dutch tax office to pay this amount already before the year end. By doing this your taxable assets reduce at the reference date from EUR 100.000 to EUR 98.800. You save still a silly EUR 15, but you already paid the tax and you do not need to pay tax over the taxable amount you are due again.
This example shows that the amounts to be saved only make a difference with substantial assets amounts. Moreover, if EUR 15 less tax to be paid makes you happy, please arrange for that. However, you can also save the hassle of arranging for the preliminary assessment to be paid. It might costs you more in tax advisors fee.
Pay the correct amount of tax
If you are liable for Box 3 taxation in such a manner that you would like to save paying Box 3 taxation, the best method to arrange for that is filing the correct income tax return. More easy it does not get.
You own real estate abroad. This is part of the Dutch tax return, but not taxed in the Netherlands. Claim the double taxation relief.
You have foreign bank accounts where source tax has been withheld already. The foreign bank balances are part of the Dutch base, but the already paid tax at source should be taken into account. Claim this double taxation relief.
You hold a bank account in your name, but some of that money is family money to which you are not entitled. For example Russian citizens can decide with the current crisis in Russia to stall their money in an account of relatives abroad. If that is your bank account in the Netherlands, then you have a debt to that Russian family member. Mention this debt in the tax return and reduce your tax burden.
There are numerous situations that are explanatory to the Dutch tax office, which need to be properly processed in the Dutch income tax return with the effect of paying less Box 3 wealth tax.
The Orange Tax Services team can assist
The Orange Tax Services team will be glad to assist you. We file the income tax return at EUR 370 fixed fee, your tax partner is included.