News item | 25-01-2024 | 15:16
Following the recently held internet consultation, technical improvements have been made to the proposal for the new box 3 system. For example, the flat rate for the 1st home will be scrapped. The Tax Authorities are currently conducting the implementation test. With the results of the internet consultation and the implementation test, a new cabinet can make a quick start with the further design and introduction of a new system, with the intended entry into force date of January 1, 2027.
The outgoing cabinet started the internet consultation for the new box 3 system in September 2023. A total of 1,737 responses were received. In addition, discussions were held with various interest groups. Waiting with the internet consultation until a new cabinet would make it virtually impossible for a new system to come into effect on January 1, 2027. As a result of the responses and discussions held, technical improvements have been made to the consulted proposal.
Improvements
For example, the different treatment of the 1st home in box 3 (actually the 2nd home, the 1st owner-occupied home that is permanently used falls in box 1), which is intended for personal use, has been deleted. Instead, this home in box 3 is also subject to capital gains tax, just like all other real estate in box 3. This has been done to simplify the system. Dropping the flat rate also makes the system more explainable.
In addition, it was decided to abolish loss settlement with years in the past. This made it possible to make losses with the previous year possible. The costs for this are high, while it is also very complex to implement. To make this possible, the Tax Authorities will have to adjust assessments from old years. Unlimited loss settlement in future years remains possible.
For real estate and shares in a family or start-up business, it still had to be determined how the value of these assets is determined, if they are already owned by taxpayers when the new system is introduced. It has been decided to use the economic value at the beginning of 2027. For homes in box 3, this concerns the WOZ value at the beginning of 2027.
In addition, it was noted that when treating enjoyment rights, such as future interest or dividends, there is a risk of improper use. To prevent this, the treatment of enjoyment rights has been adjusted. The price for purchasing the right of enjoyment is no longer deductible in one go in the year in which the right of enjoyment is established, but is practically deducted in parts in the years in which the right of enjoyment exists.
It has also been decided – in contrast to the proposal consulted – to tax the exchange rate gains or losses on bank assets in foreign currencies, such as a bank account in American dollars. This determines the result of these bank balances more accurately. This will create a greater administrative burden for taxpayers with foreign payment accounts in foreign currencies. However, this is expected to be a relatively small group.
Schedule
These improvements have been made in order to start the implementation test. It is up to the new House of Representatives and a new cabinet to decide on the final design of a new box 3 system. To reach January 1, 2027, the bill must be presented to the House of Representatives in the summer of 2024.