You do not need to submit your income tax and national insurance contributions return for 2017 until 2018. However, it may be wise to consider your income from savings and investments (Box 3) before the end of 2016. This is because the reference date for this is 1 January. For the 2017 tax year, your Box 3 assets as at 1 January 2017 are therefore decisive. Any measures intended to influence those assets must still IN 2016 be carried out.
Box 3 up to and including 2016
In Box 3, your income from savings and investments is taxed. The tax is not based on the actual return you achieve on your Box 3 assets. It is calculated on a flat-rate basis.
Up to and including 2016, a flat-rate return of 4% will be calculated on your assets in box 3, after they have been reduced by the tax-free allowance. You will pay 30% in income tax on that return.
Example
The assets relevant to Box 3 for a single person as at 1 January 2016 are as follows:
| Holiday home | 150.000 | |
| Savings accounts | 256.854 | |
| Effects | 356.986 | |
| Progress | 75.500 | |
| Possessions | 839.340 | |
| Debts | -100.000 | |
| Debt threshold | 3.000 | |
| Box 3 debts | -97.000 | |
| Power | 742.340 |
The flat-rate return and the tax on this capital are calculated as follows for the 2016 tax year:
| Power | 742.340 | |
| Tax-free assets | -24.437 | |
| Taxable base | 717.903 | |
| Fixed return (4%) | 28.716 | |
| Load (30%) | 8.614 |
Box 3 from 2017 onwards
From 2017, the tax-free allowance will be increased slightly (to €25,000 per taxpayer). However, the flat-rate return will be increased significantly if your tax base exceeds €100,000.
The return base of €742,340 from the example above results in a flat-rate return of € 32.289. The tax on this amounts to € 9.686. That’s over €1,000 more than in 2016!
The Tax and Customs Administration explains the new calculation method on its website.
In addition to the income tax payable on assets in box 3, these assets are also relevant to the income and/or means test in, amongst others, the allowances and the determination of the personal contribution under the AWBZ and the Wmo.
Anticipate
How can you avoid the higher tax rate in Box 3 coming into effect in 2017? You will need to take action in 2016 to ensure that your assets are no longer in Box 3 as at 1 January 2017.
How you can do this naturally depends on your personal financial situation. We’ve outlined a few options below. Your VWGNijhof adviser would be happy to discuss with you which opportunities you can and would like to take advantage of.
- Investing in assets that are exempt from Box 3
- Contribution to a private limited company.
- Donate
- Repaying a mortgage on your own home
- Pay tax assessments before 1 January 2017
If the actual return you achieve on your Box 3 assets is higher than the flat-rate returns, there is of course no reason to move these assets out of Box 3. In that case, the tax liability in one of the other boxes will almost always be higher.
Pro forma objection
It is not unlikely that the new calculation of the flat-rate return in box 3 will also be subject to the tax tribunal will be submitted. It may therefore be advisable (in due course) to lodge a pro forma objection to the income tax assessments for 2017.
Prinsjesdag
Incidentally, for many people, the flat-rate return of 4% – which applied up to and including 2016 – is already significantly higher than the actual return they achieve. For many, this has prompted them in recent years to transfer (part of) their Box 3 assets into a private limited company. It cannot be ruled out that the Prinsjesdag The tax plans for 2017, due to be announced on 20 September, contain measures that will make this less attractive.
VWGNijhof is keeping an eye on the tax plans for you.