Box 3 wealth taxation 2024 has been proposed and will be accepted. We explain the changes below.
Box 3 wealth taxation 2024
In the year 2024 the tax free amount is not being indexed. Sounds as a good thing, but in fact it is not. That implies the 2023 tax free amount of EUR 57.000 per person or EUR 114.000 per tax partner combination is not increased in 2024.
Box 3 tax rate
The 2023 Box 3 tax rate is 32% and that will be increased to 34% in 2024.
Box 3 taxation of VVE deposit
The VVE is applicable if you own an apartment in an apartment building. Or you share the upper house, with the lower house. The VVE is an obligation and need to have a maintenance plan for the building, it pays the building insurance. Hence the participants need to contribute to the VVE for future maintenance and current insurance costs.
If you sell your apartment. Or you sell your upper or lower house, or you are in debts. The VVE will never refund you, your contributions. Despite the Dutch tax office and the high court relates to your deposit in the VVE as your asset.
The assets are taxed in Box 3 at an assumed yield of 6,17%. Cash in the bank is taxed at an assumed yield of 0,01%. As per 2024 tax year this deposit and your deposit at the notary escrow account is seen as cash. The lower assumed yield is applicable.
Box 3 taxation and family debts
The debts fiscal partners have with each other are no longer part of the Box 3 taxation. A strange message, as if I owe my wife EUR 100, then she has a receivable on me, which is zero in the combined tax return. Nevertheless, nice of the Government to put this zero value in writing.
Debts or receivables parents have with their minor aged children are also disregarded from the Box 3 taxation as per the year 2024. Again a very strange message, as the parents are to report the assets of the minor in their income tax return, till the year the minor is 18 years old on January 1 of a year.
So a EUR 100 debt to your son, which is a receivable with your son, therefore zero value in the tax return, is no longer part of the tax return. Sometimes you wonder if the Government understands their own rules.
Box 3 in 2027
The new tax law that is now in preparation is to be launched no later than December 31, 2025 to become effective in the year 2027. If you know that we have 18 political parties in the Netherlands who all want to have a say in this law, even a straight line will be a full twist after it has been put on debate.
That said, anything you read now about the 2027 Box 3 taxation is not likely to show up in the actual new rules.
The call is for taxing the actual yield made on investments. The reason to tax the assumed yield in 2001 was exactly because the Dutch were too good at hiding the actual yield. Or finding ways to make the yield not a yield but a nontaxable value change. My expectations are that these tricks will be active again.
The game changer could the taxation on capital gains. That is something we do not know in the Netherlands. For instance, a Box 3 property (rental house), can go up in value. Is that taxed instantly? An EUR 1000 value increase you can pay the tax for, but what if the increase is EUR 10.000 or EUR 100.000? Can you pay the tax, or do you need to sell the house to pay the tax. Which is ridiculous of course.
Another indication is that the increase in value of the Box 3 house is only to be paid in case of actual sale, or in case of inheritance. But what happens if you migrate from the Netherlands? Is the increase taxed the moment you move away, or when you actually sell. I think when you actually sell, as the tax collector can put a claim on the house. It cannot be transferred before the tax is paid.
Living abroad and Box 3
The moment you move away from the Netherlands and you are no longer a Dutch tax resident, you could still be subject to Box 3 taxation. That is the case when you own a property in the Netherlands. The tax treaties are clear on the matter. A property owned in the Netherlands, is only subject to taxation in the Netherlands. The taxation is in Box 3.
Tax is exciting
We think tax is exciting, maybe with exception of the Box 3 taxation. The persons that do not fully spend their income, but keep money on the side for a rainy day are not supported. No, they are seen as a source of taxation. Then again, the Netherlands is a country with a socialistic thought, the rich (with Box 3) should be able to support the poor (no Box 3) and taxation is a method.