Box 3 Guide
To help you navigate through the maze of court rulings, the government's proposals and commitments, and still unanswered questions, we have conveniently arranged all relevant information for you. We will continue to update this page in response to new information.
Background and introduction Dutch Income Tax
In 2001, after approximately 35 years, the Income Tax 1964 had to make way for the box system of the Income Tax Act 2001: box 1 for income from work and home, box 2 for income from substantial interest and box 3 for income from savings and investments.
More than twenty years later, Box 3 appears to have been shaken to its core due to all the criticism from society regarding the unrealistic fixed returns imputed over savings in this box and the social demand for taxation based on actual returns.
Christmas Judgment
The final blow came from the Dutch Supreme Court in 2021 with the Christmas Judgment. The Dutch Supreme Court ruled that box 3 as of 2017, was no longer tenable because it violated the fundamental rights of taxpayers. This judgment by the Dutch Supreme Court has caused quite a stir but has also raised many questions.
The Dutch cabinet had previously been able to parry the social demand for taxation based on actual rather than deemed returns with technical arguments. However, now the government must come up with concrete proposals for a taxation system based on actual returns. In addition, the Dutch cabinet had to offer legal redress to the taxpayers who had been duped.
Legal redress and bridging regime
Two laws on the box 3 system were adopted on 20 December 2022. One of them concerns the codification of the legal redress following the Christmas Judgment, for the years 2017-2022. The second law regulates the bridging legislation for the years 2023 to 2027, until the entry into force of the new system.
Legal redress and bridging regime still fall short
On 6 June 2024, the Dutch Supreme Court ruled that the statutory redress still fell short and that additional redress was required. According to the Dutch Supreme Court, taxation should be based on actual returns if that produces a more favourable result for the taxpayer.
Actual return according to the Dutch Supreme Court
In its judgments, the Dutch Supreme Court has outlined the contours of the concept of ‘actual return’.
The following principles apply:
- Actual returns include not only regular benefits from assets (such as interest, dividends, and rent) but also changes in the value of those assets.
- Both positive and negative as well as unrealized changes in value are included.
- Interest in box 3 debts is deductible, but other costs are not.
- The actual return is based on nominal returns, so no inflation correction takes place.
- Positive or negative returns in other years are not considered (no 'loss carry-over').
- The tax-free allowance (‘heffingvrij vermogen’) is not considered when determining whether taxation based on actual returns is more advantageous than the law-based legal redress (‘Wet rechtsherstel’) or the 'regular' box 3 legislation.
Box 3 Counterevidence Scheme Act
As of 19 July 2025, the Box 3 Rebuttal Regulation Act entered into force. This Act regulates the additional restoration of rights for box 3 by codifying the case law of the Supreme Court and, if necessary, giving further substance to the concept of actual return.
Proposal Actual Return Box 3 Act
The design of the new Box 3 system is based, as a rule, on taxing actual returns under an asset accumulation system. This means that both income (such as interest and rent) and changes in value are included in the tax each year. For certain assets, an exception applies and tax is only levied when a capital gain is actually realized (such as upon the sale of real estate). The government submitted the Bill on Actual Returns in Box 3 to the House of Representatives on 19 May 2025, despite negative advice from the Council of State. The proposed system is scheduled to enter into force on 1 January 2028.
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