The Netherlands taxes savings and investments in “Box 3”. After court rulings against the old notional-return system, the government has been trying to move to a tax on actual returns. On 2 November the Raad van State (Council of State) published its advice, adopted on 28 October, on the cabinet’s Novelle uitbreiding vermogenswinstbelasting box 3. This is an amendment to the Wet werkelijk rendement box 3 bill, which is already before the Senate (Eerste Kamer).

What the cabinet proposed

  • The original bill: from 1 January 2028, an annual tax on actual returns, including unrealised gains (an accrual or “vermogensaanwas” system). Real estate and start-up shares would be taxed only on realised gains.
  • The amendment: from 2028, move financial instruments into a realised-gains (capital gains) system as well, as a first step towards a full capital gains system by 2030. Until 2030, a limited set of assets would remain under the accrual system.

What the Council of State found

  • Rushed process: making a system change through an amendment, “met grote spoed” (with great haste), undermines the care of the legislative process and harms the bill’s quality and implementation.
  • Unequal treatment: taxing some assets under one system and others under another “zonder duidelijke rechtvaardiging” (without clear justification) “is kwetsbaar” (is vulnerable).
  • Cost: the temporary hybrid system needs 252 FTE of staff and about €31 million in extra implementation costs.
  • Unworkable for 2028: the Tax Administration’s own implementation test finds the amendment unworkable for 2028. Given existing workloads and planned budget cuts at the Belastingdienst, the Council says introduction in 2028 is “niet verantwoord” (not responsible). It also cites uncertainty over how the plan is to be funded.

The advice

  • Main advice: withdraw the Actual Return in Box 3 bill, do not submit the amendment, bring in a new bill, and switch to a new Box 3 system in one step in 2030.
  • Fallback: if the cabinet presses on, it should bring in the capital gains tax for all Box 3 assets only from 2030.
  • Either way, the current flat-rate (forfaitaire) system with the counter-evidence rule would stay in place for 2028 and 2029.
  • The amendment should not go to the Tweede Kamer unless it is changed.

Who this affects

Dutch savers and investors pay Box 3 tax. The advice is not binding. The cabinet can still send the amendment to parliament, and NL Times notes that bills with poor advice have passed before. If the advice is followed, savers would face two more years of the current system, under which they can claim a lower tax by proving lower actual returns, before a single switch in 2030. A tax on unrealised gains from 2028 would be off the table. The advice adds to the pressure on the cabinet, which, NL Times reports, is still trying to win enough support for its tax plan in parliament and the Senate.