The Ministry of Finance has devised two ways to compensate wealthy savers and investors for the excess capital yield tax or Box 3 tax. The reparations will be made for the tax years 2017 up to and including 2022. The current year has been included, because the Tax and Customs Administration has already sent provisional assessments for 2022.
This obligation to compensate stems from a judgment of the Supreme Court on 24 December. The highest Dutch court then ruled that the Box 3 tax, also known as the savings tax, is contrary to European law. The Dutch tax rate is on average much higher than the return that the taxpayer can achieve on his capital.
About 40 percent of all Box 3 taxpayers only have savings, while the tax authorities have assumed since 2017 that every Dutch person with more than 30,000 euros in assets holds at least one third of that amount in shares or other investments. The fixed tax rate in Box 3 was between 1.9 and 5.7 percent in 2021, while savers made 0 percent return. Only in 2017 was the average savings rate slightly above zero at 0.25 percent.
Two recovery variants
In the recovery options that Van Rij is submitting to the House of Representatives, the Tax and Customs Administration no longer makes assumptions about the ratio of savings to investments. Instead, the tax authorities look at how much savings and investments individual taxpayers actually owned in a given year. Dutch citizens who only had savings in one or more of the recovery years do not owe any savings tax over those years with retroactive effect and will receive a refund of the tax paid.
The two variants differ in the treatment of investments. In the first variant, the tax authorities tax investments (shares, bonds, second homes) with retroactive effect on the basis of the average investment return over the previous fifteen years. In the second variant, the Tax and Customs Administration uses the average investment return in that specific tax year for each of the six recovery years. That average return is determined on the basis of stock market indices.
Investment returns have been significantly higher than returns on savings over the past fifteen years. A person whose entire Box 3 capital consists of shares or other securities will therefore receive less money back in the recovery operation than someone who only saves. Investors can only expect compensation if the average investment return in one or more recovery years was less than the tax rate charged.
Small savers
From a legal point of view, Van Rij is only obliged to compensate the 60,000 Dutch people who timely objected to their tax assessment for 2017-2020. That would cost the treasury 2.4 billion euros. But the House of Representatives wants at least all ‘small savers’ to be compensated. At the beginning of February, a parliamentary motion to that effect was unanimously adopted. If all Box 3 taxpayers are entitled to a revision of their tax assessment, the ‘damage’ for the treasury will be much greater: 6.9 billion euros in the first variant and 11.7 billion euros in the second variant.
The ministry has investigated two other variants, but they have been rejected. According to Van Rij, repaying all Box 3 tax collected for 2017-2022 is far too expensive (26 billion euros). He also finds this unnecessary, because some investors achieved a very good return on capital in those years and therefore paid too little rather than too much tax.
On the other hand, according to the State Secretary, it is ‘impossible’ to determine the actual return for everyone and to levy a tax afterwards based on that real return. That is far beyond the capacity of the Tax and Customs Administration; some standardization of the repair operation is necessary.
Actual return
As of 2025, the government does want to introduce a wealth tax based on actual returns. Van Rij announces that this will become a capital gains tax, whereby the tax authorities determine the value increase (or decrease) of the assets (securities, savings, real estate) of each taxpayer on 1 January each year. This increase in value is then taxed above the exemption threshold at a certain rate. If there is a decrease in value, that loss is tax deductible in Box 3. The owner-occupied home remains – against the advice of numerous tax experts – in income tax Box 1.
Van Rij wants to draw up an emergency law for the intervening years 2023 and 2024 to temporarily replace the capital yield tax deferred by the Supreme Court. Wealth will also be taxed for the next two years according to the system chosen by the House of Representatives for the reparations. The cabinet wants to make a final decision on this at the beginning of May.