The Cabinet, in a letter has indicated that it is considering not abolishing the valuation of let properties in Box 3, the so-called vacancy rate.
Empty value ratio
The plan to abolish the net asset value ratio forms part of the coalition agreement. The aim of the measure is to ensure that the valuation of let properties in Box 3 more accurately reflects their actual market value.
The starting point for the valuation of properties is the WOZ value. However, rented properties that are subject to statutory rent control are valued at a lower figure in order to bring the taxable income into reasonable proportion with the actual return achieved. The extent of this reduction depends on the ratio between the actual (basic) annual rent (as at 1 January) and the WOZ value. The valuation table for income tax purposes can be found in Article 17a of the Income Tax (Implementation) Decree 2001 and for inheritance and gift tax in Article 10a of the Implementing Decree to the Inheritance Tax Act 1956.
New table
State Secretary Van Rij is now proposing to retain the vacancy rate after all, but to amend the valuation table. Valuing let properties at their WOZ value would mean that these properties are valued on the same basis as unlet properties. That would be contrary to European law. The Government proposes the following updated table (in future, this table will then be updated periodically, for example once every five years):
| Ratio of rent to WOZ value more than | Ratio of rent to WOZ value less than | Empty value ratio |
| 0% | 1% | 73% |
| 1% | 2% | 79% |
| 2% | 3% | 84% |
| 3% | 4% | 90% |
| 4% | 5% | 95% |
| 5% | 6% | 100% |
| 6% | 7% | 100% |
| 7% | - | 100% |
If the annual rent for a let property with a WOZ value of €300,000 is €13,500, this represents 4.5% of the WOZ value. The vacancy value ratio, based on the current table, is then: 67% * €300,000 = €201,000. Based on the new table, the vacancy value ratio is: 95% * €300.00 = €285,000.
Other changes
In addition to updating the table, the vacancy rate is also adjusted in the following respects:
- fixed-term contracts are excluded from the vacancy rate;
- In the case of lettings to affiliated parties, the highest percentage in the table is applied (in the proposed new table, this is 100%).