State Secretary Snel of the Ministry of Finance has announced the final rates of return to be applied to Box 3 in 2019.
Box 3
This relates to your income from savings and investments. In Box 3, the following, amongst other things, are subject to income tax:
- bank and savings balances;
- securities and other investments;
- property, other than your own home and property used for business purposes;
- outstanding debts, except those owed by your own company.
The starting point is the value of your assets in Box 3, less your liabilities in Box 3 as at 1 January. After deducting the tax-free allowance of €30,360 (2018: €30,000) per tax partner, a flat-rate return is calculated. Income tax at the rate of 30% is then payable on this return.
Return rates in 2019
Two return categories are used for the flat-rate return. Return category I relates to the savings component. The flat-rate return for this category is based on the returns on savings accounts. Return category II relates to the investment component. The following return rates apply in 2019:
- Efficiency class I: 0,13% (2018: 0,36%);
- Efficiency class II: 5,60% (2018: 5,38%).
The tax bracket in which your assets in Box 3 are taxed depends on the amount of the tax base. The following weighting factors apply for 2019:
| Disc | Basis | Weighting factor | ||
| from | up to | I | II | |
| 1 | 0 | 71650 | 67% | 33% |
| 2 | 71651 | 989736 | 21% | 79% |
| 3 | 989737 | 0% | 100% | |
One and a half million
Suppose the balance of your assets and liabilities in Box 3 is €1,500,000. How much income tax would you then pay?
Your fixed rate of return will then amount to € 69.128. You’ll pay 30% in income tax on that: € 20.738. The flat-rate return is calculated as follows:
| Disc | Assets in Box 3 | Weighting | Efficiency | ||||
| 0,13% | 5,60% | Total | |||||
| 30.360 | |||||||
| 1 | 71.650 | 48.006 | 23.645 | 62 | 1.324 | 1.386 | |
| 2 | 918.086 | 192.798 | 725.288 | 251 | 40.616 | 40.867 | |
| 3 | 479.904 | 0 | 479.904 | 0 | 26.875 | 26.875 | |
| 1.500.000 | 69.128 | ||||||
Alternative
It may still be worthwhile to transfer your assets in box 3 to a private limited company (or a open fund on joint account). That depends on the actual return you achieve. This is because, within a private limited company, the actual return achieved is subject to corporation tax (usually 20%). And if you withdraw the return from the BV, you will pay substantial interest tax (Box 2) at a rate of 25%.
If your assets in Box 3 consist mainly of savings, you are currently receiving virtually no interest. In that case, contributing them to a private limited company is almost always advantageous. For other types of assets, see we I’d like to know whether your contribution would be of interest to a private limited company.
Adjustment to Box 3
The Rutte III Cabinet has announced plans to amend Box 3. However, this is not yet part of the tax plans for 2019. This means that, for those with low(er) returns, it remains an attractive option to avoid Box 3 by transferring assets into a private limited company (BV). You must arrange this before 1 January 2019. This is permitted because it can still be done at the last minute.
As in previous years, the question of whether the flat-rate levy under Box 3 is legally valid has been referred to the tax court for 2017. If you pay income tax under Box 3 and wish to join these proceedings, you must lodge an objection in good time. See our article Box 3 procedure leads to a massive number of objections.