Increased administrative burden Box 3

April 4, 2024

A proposed new tax plan in the Netherlands, aimed at restructuring the Box 3 tax system, may require citizens to gather more information to support their tax filings. According to the Advisory Board on Administrative Burden (Adviescollege Toetsing Regeldruk), this could pose significant challenges, particularly for individuals with diverse assets beyond simple bank accounts. 

The Advisory Board emphasized the potential complexity of the calculations, especially when assets include various types of investments. In a recent advisory to the government, they suggested exploring ways to streamline administrative obligations to alleviate the burden on taxpayers. "While the regulatory implications of the proposed law are substantial, it is encouraging that they have been thoroughly assessed. It is essential to focus on minimizing regulatory burdens to facilitate compliance and reduce administrative burdens for taxpayers," the advisory report stated. 

The proposed "Actual Return Box 3 Tax Act" aims to levy income tax based on the actual returns generated from assets. At the core of the new system is a tax on the total actual returns of assets, encompassing earnings such as interest, dividends, rent, and lease, as well as realized and unrealized changes in asset values, including gains or losses on stocks. 

Under the proposed legislation, real estate and shares in family businesses and innovative startups would be subject to a capital gains tax, with positive and negative changes in value only taxed upon realization or the end of tax liability in the Netherlands.