In the Netherlands, there is officially no wealth tax, but there is a capital yield tax (vermogensrendementsheffing): you pay a tax on your capital return from savings and investments. This tax is detailed in box 3 of the income tax. You pay tax on the returns from assets, which is offset by the returns from liabilities. The primary residence is not included, but any potential rental property in the Netherlands is. This tax is not on the actual returns made, but the government determines what return you would have made (fictitious returns).
Tax-Free Capital (Heffingsvrij vermogen)
Everyone has a tax-free capital. This capital is kept out of the tax levy. The tax-free capital was set at 50,650 euros per person for 2022 and 57,000 euros per person for 2023. So, you don’t pay any tax on this. If you have a Dutch tax partner (fiscale partner), you will not pay tax on double that amount in total.
Fictitious Yield (Forfaitair rendement)
It doesn’t matter if the interest rate on your savings account is now 0%, 1%, or 5% or what returns you actually achieve. Legally, what your return is, is stipulated. This is called a fictitious return. The Tax Authority does try to use percentages that approximate the average actual return percentages for savings and investments. A more complex calculation is used to deduce a return percentage: that’s your return. This involves 3 asset classes: savings, investments/other assets, and liabilities. Cryptocurrencies fall under other assets, as does rental properties. The percentages change every year. You then pay 31% tax on the fictitious return in 2021 and 2022, and 32% in 2023.
Table of Fictitious Percentages Box 3 New Method
To calculate the tax on box 3 income, there are two methods: an old and a new one. In this article, we discuss the new calculation method. When submitting the tax return for our clients, we also calculate the old method for the years 2021 and 2022. We then use the most advantageous method for all our clients.
| Capital | 2023 (provisional) | 2022 | 2021 |
|---|---|---|---|
| Savings | 0.36% | 0.00% | 0.01% |
| Investments/Other Assets | 6.17% | 5.53% | 5.69% |
| Liabilities | 2.57% | 2.28% | 2.46% |
The reference date for the capital is January 1st. This means you should use the value of the assets and liabilities on January 1st.
Step-by-Step Plan
- Determine the return of each type of capital on January 1st using the percentages in the table.
- Add the return from savings to the return from investments and other assets. Reduce the total by the return from deductible liabilities.
- Calculate your capital by reducing the total of your assets with your liabilities.
- Determine the yield percentage by dividing the calculated yield by your capital.
- Reduce your capital with the tax-free capital to calculate the savings and investment base.
- If you have a tax partner, you can split the base between you. Multiply the return percentage by your share in the savings and investment base to calculate the savings and investment benefit.
- You pay 31% tax on the savings and investment advantage in 2021 and 2022 and 32% in 2023.
Example Calculation for 2022
Suppose on January 1, 2022, you have 100,000 euros: 50,000 euros in your savings account and 50,000 euros in stocks. You don’t have a fiscal partner (fiscale partner) and no debts. The calculation for 2022 is:
- Calculate the return on your savings: 50,000 euros * 0.00% = 0 euros. Calculate the return on your investment accounts: 50,000 euros * 5.53% = 2,765 euros.
- Calculate your total return: 0 euros + 2,765 euros = 2,765 euros.
- Calculate your capital = 100,000 euros.
- Calculate the return percentage: 2,765 euros / 100,000 euros = 2.765%.
- Base for savings and investments: 100,000 euros – 50,650 euros = 49,350 euros.
- Calculate your benefit from savings and investments: 2.765% * 49,350 euros = 1,364 euros.
- Calculate the tax: 1,364 euros * 31% = 422 euros.
So, in the end, the return on your savings and investment accounts would be 2,765 euros, and you would owe 422 euros in tax on this return in 2022.
Note: As mentioned above, there are two methods for calculating tax on box 3 income: an old and a new one. In this article, we discuss the new calculation method. When filing the tax return for 2021 and 2022 for our clients, we also calculate using the old method. We then use the most beneficial method for all our clients.
Unfair
Many people find this capital yield tax (vermogensrendementsheffing) unfair. On one hand, tax has already been levied on the savings when it was earned, for instance, in the form of salary or profit. People who immediately spend the money don’t have to pay tax on it again. This discourages saving and promotes consumption. On the other hand, the levy is seen as unfair because it doesn’t consider the actual return, but assumes a fictitious return (fictief rendement). This means that someone who gets poor returns on the stock market is at a disadvantage compared to those who achieve good returns: both pay the same tax.
Avoidance
The tax on savings is evaded in several ways. One method is by setting up a corporation (BV). Of course, there are associated setup and maintenance costs. A BV is liable to pay corporate tax on the actual result, and you must file a corporate tax return. This structure is therefore useful if your return is less than the fictitious return. Besides setting up a BV, there are also other ways to reduce tax on savings, such as buying a house abroad. We can handle the tax declaration of your foreign property, but in the Netherlands, you usually pay almost no tax on it.
Declare your savings and other assets through the income tax return (aangifte inkomstenbelasting). Let us at Taksgemak handle it for you. It’s much easier that way.
About the author: Kelly Hendrikse blends her interest in entrepreneurship with her expertise in tax advice at Taksgemak. She assists both businesses and individuals in understanding tax rules, making complex matters more manageable. Committed to keeping her clients on the right path, she proves to be a valuable ally in any tax-related matter.
