News item | 15-04-2022 | 12:00
The government plans to start levying tax on the actual return in box 3 from 2025. A letter about what this new system will look like was sent to parliament today. With a so-called capital gains tax, an annual tax will be levied on the actual yield of the capital.
The cabinet has also sent parliament a letter containing options on how to offer legal redress to people who have paid tax on assets in box 3 for the years 2017 to 2022. This was in response to a decision by the Supreme Court at the end of the year. last year. The proposal is to offer people reparation of rights based on a new calculation that approximates the actual return as closely as possible. Two variants have been developed for this. Temporary legislation is being prepared along the same lines for the intervening years 2023 and 2024.
Difficult choices
State Secretary Van Rij of Finance: “Wealth has been taxed in the wrong way for years. People with savings therefore paid too much tax, while property owners paid too little due to the strong house price increases. A new system will therefore be introduced from 2025 in which we will levy tax on the return that people have actually achieved. Of course we will also rectify the past, although there is no ideal solution for this. In addition to advantages, all options that have been examined also have disadvantages. This means that we will have to make difficult choices in the near future.”
Decision
The government wants to provide people with clarity as soon as possible about what they can expect from the recovery. At the same time, the government believes it is important to discuss this with the House of Representatives next week. There is no single simple solution and every choice has different budgetary and implementation implications.
Depending on the choice of the target group and the variant, the recovery will cost between € 2.4 billion and € 11.7 billion. Final decision-making will only take place after the debate during the spring decision-making process around the beginning of May. A decision is therefore made on the budgetary coverage. Based on this planning, the Tax and Customs Administration can start the recovery around 1 July, so that in any case all massive objections can be settled before 4 August.
Target audience
About 60,000 people have objected to the tax in box 3 for the tax years 2017-2020. The cabinet has yet to decide whether only this group will receive legal redress or whether the group will be expanded. Furthermore, all people for whom the tax assessment has not yet been determined are eligible for the restoration of rights.
Past (2017 to 2022)
When considering the options for restoration of rights, the government must weigh up the options between complying with the Supreme Court ruling, feasibility and budgetary consequences. The government therefore proposes to offer people automatic restoration of rights based on a new calculation. The calculation is based on the actual distribution of savings and investments of a taxpayer. That is a big difference with the current situation, in which it is assumed that the capital on which you pay tax consists for a certain part of investments, even if that is not the case and the capital consists entirely of savings. Two recovery options have been developed.
Savings variant
In the first variant, people with savings will be taxed on the basis of the current savings interest rate, which has been 0% in recent years. For debts, the mortgage interest rate is linked and for investments (securities, real estate) the multi-year average return for investments is assumed – just like now. For example, this does not compensate investors for poor results in a specific year, as they are also not taxed extra for good results in another year. A taxpayer with € 200,000 in assets in 2020, of which three quarters (€ 150,000) is savings and the rest is investments, will receive € 916 back in this variant. The same taxpayer with € 200,000 in assets and only a quarter of savings (€ 50,000) will not receive any money back in this variant, because in this calculation he should have actually paid more tax than he paid.
Flat-rate variant
In the second variant, the lump sums are adjusted to the average returns for these asset classes in a year, so that this corresponds as closely as possible to the actual return in that year. In this way, the actual return is approached as closely as possible.
The restoration of rights based on one of these variants removes a major pain point of the old box 3 system. This is therefore a just form of recovery. It is possible that people still start procedures, because the calculation in an individual case does not exactly match the actual return. Two variants of how to deal with possible new procedures have therefore been presented.
Present (2023 and 2024) : emergency legislation
Urgent legislation is needed to be able to properly levy tax in box 3 again in 2023 and 2024. The government proposes that this emergency legislation be aligned with the eventual design of the restoration of rights. It is still being investigated whether it is possible to introduce a wealth tax as of 2023, but this was not feasible from a technical point of view. A temporary wealth tax does not make sense if from 2025 the actual return will be taxed on the basis of capital growth.
Future (2025 and beyond)
The government’s aim is to have a new box 3 system based on actual returns from 2025. What this new system could look like has also been sent to the House. The government proposes to design the new box 3 system as a capital gains tax, whereby an annual tax is levied on regular income (such as interest, dividend, rent and lease less costs) and the development of the value of assets (such as exchange rate gains or losses of stocks and property appreciation or depreciation).
For example, the value development of a share portfolio is taxed from year to year and not only in the year in which part of the shares are sold. In this way, long-term deferral of taxation is avoided.