The Netherlands Ministry of Finance has issued Letter No. 2025-0000021906 on 24 January 2025, informing both houses of parliament of its decision to move forward with a proposed overhaul of the taxation regime for savings and investment income, commonly referred to as Box 3.
This decision comes despite objections from the Council of State (COS) citing the following reasons why the Box 3 regime faces criticism:
- The government recognises no flawless method is available for taxing Box 3 income. A decision must be made between imperfect alternatives with challenges and limitations.
- The proposed capital gains tax, which taxes both realised and unrealised gains in a year, is simpler to implement than a tax on realised gains, which requires complex calculations and administration.
The letter also includes alternative regimes proposed by the COS which suggest taxing deemed returns, with a rebuttal option if the actual return is lower. This regime is currently in effect.
The COS also proposed taxation of realised gains only. In addition, the COS had put forward a net wealth tax, which could result in higher taxes than taxing actual returns and would require a rebuttal option.
The new regime will be enacted in March 2026 and will go into effect on 1 January 2028.
