NETHERLANDS Law and Practice Contributed by: Nathalie Idsinga and Mignon de Wilde, Arcagna
Box 3 In Box 3, the income from privately held savings and portfolio investments is taxed at a flat rate of 36% (2025). For resident taxpayers, the taxable base includes all tangible and intangible assets and sec - ond homes (the principal residence is taxed in Box 1). Movable property for personal use (such as cars, yachts and art collections) is excluded, provided it is not primarily held as an investment. For non-residents, Box 3 taxation is generally limited to Dutch real estate and related rights. Debts associated with Dutch real estate may be deducted. For both residents and non- residents, certain approved investments and savings below a specified threshold may be excluded from the taxable base. An annual tax exemption of EUR57,684 (2025) applies per taxpayer. Currently, there are two different Box 3 systems and taxpayers can elect each year which system to apply. System 1 determines the income based on deemed returns for three asset classes: • savings (including cash); • investments/other assets (such as investment port - folios, Dutch real estate, etc); and • debts. A deemed return is determined for each asset class. The tax rate is then applied to the deemed yield on the fair market value of assets and liabilities as at 1 Janu - ary each year (net wealth). Actual income, gains, and cash flows from these assets are generally irrelevant for Box 3 purposes. System 2 applies the rulings of the Dutch Supreme Court of 6 June 2024. On this date, the Supreme Court ruled that taxpayers should have the option to be taxed on their actual income from investments if they can demonstrate that this income was lower than the total deemed income in Box 3. Note that, according to the rules formulated by the Supreme Court, the actual income includes unrealised gains. The Supreme Court ruling will be adopted in Dutch law with an effective date of 1 January 2026. Meanwhile, the government has announced its inten - tion to introduce a new Box 3 income tax system by
2028. The new system is expected to combine a tax on unrealised gains and realised gains with tax on the actual return on assets at a rate of 36%. Deemed returns will no longer be used. Tax Treatment of Trusts The Personal Income Tax Act 2001 and the Inherit - ance Tax Act 1956 govern the tax treatment of (for - eign) trusts and trust-like entities (such as founda - tions), which primarily serve the personal interests of the settlor and/or the settlor’s family, as opposed to a public interest. If an individual taxpayer (the settlor) transfers assets and liabilities to such a trust (or trust- like entity) without receiving economic rights (such as ownership of shares or profit participation) in return, the transferred assets are classified as a “separate private assets” (SPA, or afgezonderd particulier ver- mogen , APV), to which the “SPA regime” applies. Under this regime, the transfer of assets and liabili - ties to an SPA is disregarded for tax purposes. The assets and liabilities of the SPA remain attributable to the settlor. As a result, the transfer of assets to a trust (or trust-like entity) is tax neutral, as it is deemed not to have occurred. Personal income tax is levied on the settlor (or their heirs) as if the settlor (or heirs) remain the owner of the assets and liabilities held in trust. Distributions from the SPA to beneficiaries other than the settlor are subject to gift tax if the settlor is (deemed) resident in the Netherlands. Upon the death of the settlor, beneficiaries must also pay inheritance tax on trust assets if the settlor was (deemed) a Dutch resident. Exceptions may apply, for example, if a beneficiary receives a fixed interest (ie, a fixed economic enti - tlement). In such cases, the beneficiary is subject to personal income tax on the fixed interest. The value of this entitlement is generally taxed in Box 3 (depending on the nature of the assets and liabilities), and the SPA regime does not apply to such fixed interests. Tax Facilities for Expatriates Expatriates relocating to the Netherlands (incoming employees) may be eligible to apply for the so-called 30% ruling. Subject to specific conditions, this regime allows for a tax-free reimbursement of up to 30% of the employee’s gross salary to cover deemed extrater -
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