Expected changes to Box 3

For 2016, some changes are expected to be made in the tax on income from savings and investments (Box 3). In effect, the tax burden on higher amounts of net wealth will be increased while the tax nurden on lower amounts of net wealth will be decreased.

Income from savings in investments is currently (2015) taxed in the Netherlands at a rate of 30% of a deemed return on investment on your net wealth of 4%. This way, the tax payable is 1.2% of your net wealth. The first € 21,330 is not taxed in 2015 (or € 42,660 for fiscal partners).

In 2016, this is expected to change. The tax free amount will be € 25,000 per person (so € 50,000 for partners). Then, on the first € 100,000 of net wealth a deemed return on investment of 2.9% will apply. This percentage is said to be based on the average interest rates of the last five years. This way, the first € 100,000 is now taxed at 0.87%. Above that amount, the deemed return on investment increases. This is because also the average return of the last five years on more risky investments such as company shares is taken into account.

This way, for the next € 900,000 the deemed return is 4.7%, leading to a tax of 1.41% on that amount. For amounts of net wealth over € 1,050,000 the deemed return on investment is 5.5%, leading to a tax on those Euros as high as 1.65%. Not certain yet is if these net wealth amounts are per fiscal partner or not. We believe this will probably be the case.

It is possible to avoid these high amounts of income tax on savings and investments. You could for example consider paying back your mortgage loan on your house. This will however lead to less tax deductible interest payments, which also have their value. Another idea may be to incorporate a Dutch BV that holds your wealth. This way not your deemed return on invesment is taxed (at at maximum 30% of 5.5% = 1.65%), but the real return is taxed at 20 – 25%. There is also the possibility to incorporate a tax exempted investment fund (in Dutch: vrijgestelde beleggingsinstelling or “VBI”). This way, any income is in principle effectively taxed at 1% instead of 1.65%.

Of course, we can help you with all these solutions to mitigate your taxes.