At the moment, (the return on) real estate is taxed in box 3 (assets). A transitional scheme applies up to and including 2026 that penalises property investors. See also this blog byTomas Lim. State Secretary Van Rij has now presented a new plan for wealth tax to the Lower House of the Dutch Parliament. Under this new plan, the letting of properties will be taxed (at a progressive tax rate) in box 1 (income from work and home). Other assets, such as savings and securities, will continue to be taxed in box 3.
Increased (property) valuations also to be taxed
As the tax authorities want to tax not only direct income from assets but also any increases tovaluations, this system will probably be combined with capital growth tax and/or capital gains tax. The former taxes the growth in value without a sale having taken place; the latter taxes the growth in value only if it is realised.
Definitive system from 2027
The idea is to introduce a definitive system for the actual taxation of assets from 2027 and to decide how to deal with expenses, gains as well as losses. Given the wide variety of preferences held by the coalition partners, they may well need the whole of this period to reach agreement on the new system.
Transitional scheme to continue
Until there is greater clarity on this, the taxation of assets will continue to be based on the current notional returns on the individual assets, such as the 6.17% (interim rate 2023)notional return on real estate.
One small bright spot: a number of legal actions are being pursued on the fairness of this notional return. This has led to a flood of objections to final tax assessments dating from 2017 to the present day. There are now so many that the state secretary has announced he will defer decision-making on these and only decide after the Supreme Court has ruled on the variouslegal actions. Nor will the tax authorities impose any more final income tax assessments for 2021 and 2022 until the Supreme Court has issued its judgment.
File an objection
If you’ve nevertheless received a final income tax assessment for 2017 or a later year in the past six weeks, we recommend that you file an objection. Remember to point out that the actual realised return is lower than the fixed return. The decision on the notice of objection will then be deferred by the tax authorities. The Supreme Court is expected to provide greater clarity on how the actual return ought to be calculated and on the tenability of the present system. Whatever the outcome, in filing an objection you have ensured that you have secured your rights.
