Box 3 and the coming changes from 2025/2026

Index

What is box 3?

Let’s first take a look at what box 3 is, what it looks like now, and why there are changes coming to this taxation system.

Box 3 is the system for taxing the income generated from assets within the Netherlands. This generally includes bank balances, investments accounts, investment properties and miscellaneous investments. It is therefore also part of the Dutch income tax act for which, Dutch taxpayers file an annual income tax return.

Currently, box 3 measures the value of your assets at the start of the tax year, (January 1^st) and calculates a fictional/expected income based on the types of assets within your equity.

Why changes are needed

In late 2021 the Dutch supreme court ruled that this current system, violates European law and needs to be changed. Specifically, the Netherlands will need to move towards a system in which the actual income from savings and investments is taxed, rather than a fictional income like in the current system. Since that ruling, multiple changes have been implemented, like differentiating between different types of assets and assigning them each a separate expected return on investment rate. However, since this still does not meet the criteria set by the supreme court, new changes are still coming.

The May 2025 proposal and capital gains tax

On the 19^th of May 2025, a bill was proposed in the national parliament to introduce a new system in which finally actual income will be taxed and fictional or expected income has been eliminated.

This bill introduces a capital gains tax, similar to what neighbouring countries maintain. While this bill certainly moves us toward taxing actual income, like dividends, interest and rent, it also contains taxation of unrealised gains in the value of your assets (with the exclusion of investment properties).

Any unrealised losses are also deductible, however including increases in value in taxation, means that there will still be a form of taxing income that has not actually been earned.

Adding changes in value to the calculation of taxable income also creates certain issues outside of the fact that it might still not mee the criteria set by the supreme court. Mainly the fact that for example your bank account constantly changes value base don personal expenses and income. Are those personal expenses deductible? Is your wage now considered taxable in box 3 as well, since it increases the value of your bank account, which is a taxable asset? Short answer, no it will not be, but since it is part of the value changes within your accounts, it means these will need to be eliminated from the value changes, in order to calculate the actual taxable change in value. This means an enormous increase in administrative responsibilities for private individuals. The system for this introduced with this proposed bill is very similar to that of eliminating private withdrawals and deposits from a business’ profit calculation. The problem is that business use administrative software to keep track of all their transactions. Not only is this expensive software, it also time intensive to keep track of these things. Therefore, these changes will increase the threshold of being able to properly invest within the Netherlands significantly.

What’s next for box 3 in the Netherlands?

If this proposed bill is accepted by parliament, whether any changes will still be made and even how the financial institutions like banks and investment firms will adapt is still to be seen. What we do know is that the current expected start date for this new system is the tax year 2028. For that to be viable, this bill will need to have been accepted before March next year, so that all financial institutions have the proper time to adapt their software. Which does open up the possibility of them easing the burden for the taxpayer itself. If only done by some, it would give those institutions a significant competitive advantage.