State Secretary Snel stated in the Room It has been stated that Box 3 will not be amended as of 1 January 2020. This means that your savings company can remain in operation for at least another year. Or that it might be worth setting up a savings company before 1 January 2020.
On 23 June 2020, State Secretary for Finance Vijlbrief announced in the House of Representatives that the plans regarding the Box 3 tax would not go ahead. It is not yet clear exactly how the tax will be adjusted. It looks as though the “Spaar-BVs” will remain in operation for a little while longer.
Box 3
In Box 3, income from savings and investments is subject to income tax. For most taxpayers, this relates to balances in bank accounts, securities portfolios, (let) property and receivables (for example, from children). Debts that are not taken into account in Box 1 or Box 2 reduce the tax base for Box 3.
Income in Box 3 is calculated on a flat-rate basis. Up to and including 2016, this income amounted to 4% of the value of the assets in Box 3. Since 2017, the flat-rate return has been calculated on the basis of three different rates of return. The first €30,360 of your assets in Box 3 is exempt. The flat-rate return on the next €71,650 is then: 1,9351%, in respect of the following €918,086: 4,4513% and on any assets you have in excess of €1,020,096: 5,6%. These allowances apply per tax partner.
Income tax amounts to 30% of the income calculated using these flat-rate returns.
Savings-BV
People who have put their money into a savings account at a bank know that these returns have fallen far short of expectations for years. The flat-rate return is therefore based not only on the interest on savings accounts, but also on returns generated, for example, by investments in shares.
It may therefore be of interest to these individuals to place their savings in a private limited company (or an open-ended mutual fund). In that case, the interest actually received is subject to corporation tax (the rate of which is a maximum of 25% in 2019). If the profit remaining after corporation tax has been paid is distributed, a further 25% in substantial interest tax is payable.
Where returns are lower, this levy works out to be considerably lower than the 30% income tax on the flat-rate return.
Excessive
The tax you pay on Box 3 is excessive. The Supreme Court has now ruled on this on several occasions. However, the Supreme Court leaves it to the legislature to provide the necessary redress. As we mentioned at the start of this article, the legislature, through the State Secretary for Finance, has indicated that it will not be introducing this remedy in 2020.
The Supreme Court has now ruled on (test) cases covering the years up to and including 2016. It is unlikely that the Supreme Court will lend a helping hand to taxpayers for 2017 and subsequent years. Given that the State Secretary is not planning to make any (significant) changes to Box 3 either, you can keep your savings company going for (at least) another year. Unless, that is, you intend to use the funds in such a way as to achieve a higher return. VWG would be happy to work out for you whether your savings (and other assets) are best held within your private limited company.