Legislative proposal on actual return in box 3

It has taken some time, but earlier this week the State Secretary finally presented the legislative proposal regarding the ‘box 3 real return taxation regime’ to the Lower House. The proposal is based on real return taxation so that a taxpayer with a low return on investment will pay less tax than a taxpayer with a high return.

Implementation of this real return taxation regime means that more data will be required to calculate Box 3 tax due in comparison to the current deemed return taxation regime. The Dutch government aims to limit the administrative burden on the taxpayer as much as possible and, where possible, to pre-fill the tax return with data received from Dutch financial institutions. Such Dutch financial institutions will then have to provide more information about their customers.

The taxable return will include so-called direct and indirect revenues. Direct revenue includes interest income, rental income and dividend income received minus costs. Indirect revenue includes positive or negative fair market value changes, for example, in relation to shares. Such fair market value changes would in principle be subject to an annual ‘capital gains accrual tax’. An exception to this capital gains accrual tax would apply for real estate investments and shares in start-ups, which would be subject to a capital gains tax levied only upon the moment of actual sale. For this purpose, also a new definition of startups will be developed that is more in line with the atypical aspects of this type of company. If the taxpayer realizes a (capital) loss, then such loss may be offset against future box 3 income.

Important to note is that the taxation of the owner-occupied home (the taxpayer’s main private residence) will not move to Box 3 but will remain in Box 1.

Contrary to earlier advice from the State Council and other groups, an explicit choice is thus made for a real return taxation regime combining a capital gain accrual tax and capital gains tax.

The proposed implementation date is 1 January 2028. To achieve this, the proposal must be adopted by the House of Representatives by 15 March 2026 at the latest. This is necessary to give banks and insurers sufficient time to adapt their software to the new taxation regime. The new definition for startups will be incorporated via an amendment to the proposal.