Box 3 – Current Status And Previous Years: What Can You Do Now?

In 2021, the Dutch Supreme Court (Hoge Raad) ruled that the deemed return system under Box 3 was contrary to European law. This article briefly outlines the current status of the Box 3 regime and explains what steps may still be taken in respect of previous tax years.

When Are You Entitled to Compensation?
As from 2017, Box 3 income tax on savings and investments has been imposed based on a deemed return of 4%. The Supreme Court held that this system violates European law. As a result, the Dutch Tax Authorities (Belastingdienst) must offer compensation for the years from 2017 onwards, insofar as excessive tax was levied. Whether you are entitled to compensation depends on several factors.

Lower Actual Return
First, your actual return must be lower than the deemed return determined by the tax authorities. The calculation of the deemed return has changed several times since 2017, with the most recent development being the "counter-evidence scheme" (tegenbewijsregeling).

Counter-Evidence Scheme: Actual Return filing (Opgaaf Werkelijk Rendement)
Under the counter-evidence scheme, taxpayers who can demonstrate that their actual return is lower than the deemed return are entitled to tax compensation. A request for a tax refund must be submitted by filing the form Opgaaf Werkelijk Rendement with the Dutch Tax Administration. If you have been invited by the Tax Administration to submit this form, you must do so within 12 weeks (or 26 weeks when represented by an intermediary).

Previous Tax Years
For previous years, compensation is only available if you either lodged an objection (bezwaar) against the final tax assessment in time; or submitted a request for an ex officio reduction (ambtshalve vermindering). The time limit for filing an objection is six weeks starting from the date of the tax assessment. A request for an ex officio reduction must be submitted within five years after the end of the relevant tax year.

Years 2017–2020
Compensation is only available for taxpayers whose final tax assessment was not definite yet on 24 December 2021, in other words if the objection period was not yet expired on this date; or if the tax assessment was issued after this date. If you submitted an objection in time, the Tax Administration will send you an invitation to submit the form Opgaaf Werkelijk Rendement. Your personal deadline for filing the form is specified in that letter.

Was the objection not submitted in time, and has no ex officio reduction been requested? Then an ex officio reduction can only be requested still for the tax year 2020. The deadline for this request is the 31^st of December 2025.

Years 2021–2024
From 2021 onwards, it is no longer necessary to lodge an objection or to request an ex officio reduction. For these years, you may file an Opgaaf Werkelijk Rendement form directly. Again, the Tax Administration will send an invitation letter stating your personal filing deadline.

Important Note
If your Box 3 assets include investments for which the actual return may be subject to discussion with the tax authorities, we recommend always submitting an objection against the assessment. Doing so may also be relevant in relation to potential cost reimbursement for legal proceedings.

Action Required
To obtain box 3 tax compensation, you will need to take action. Do note, however, that the counter-evidence scheme will not always lead to a more favorable outcome.