Bill on the Box 3 Rebuttal Scheme adopted by the Senate

Box 3 levy still discriminatory

On 24 December 2021, the Supreme Court ruled that the way in which the box 3 levy has been designed since the year 2017 violates both the prohibition of discrimination (art. 14 ECHR) and the right to peaceful enjoyment of possessions (art. 1 FP ECHR). Legal redress was provided through an alternative return calculation based on the so-called fixed-rate savings option.

However, on 6 June 2024, the Supreme Court ruled that this legal redress also fails the test. In particular, the return calculation on possessions other than savings is still discriminatory. The difference in tax treatment between successful and less successful investors is still significant, without this being sufficiently justified.

The Supreme Court even took this one step further and ruled that the above likewise applies to the Box 3 Bridging Act, as the latter is based on virtually the same principles. In this respect it does not matter how big the difference between the fixed-rate and the actual return is.

On 20 December 2024, a number of other judgments addressing the box 3 legal redress was pronounced. The Supreme Court took this opportunity to clarify the return calculation on dwellings in box 3.

Box 3 Rebuttal Scheme Act

Following these judgments, the government decided to introduce a rebuttal scheme in box 3 and a bill to that effect was adopted by the Senate on 8 July 2025. The rebuttal scheme will apply with retroactive effect to 1 January 2017 under the Box 3 Legal Redress Act and to 1 January 2023 under the Box 3 Bridging Act. The starting point of the new legislation is that the return must be calculated in accordance with the statutory regulations in force in the relevant tax year. These are the Income Tax Act 2001 or the Box 3 Legal Redress Act for the years 2017 through 2022, and the Box 3 Bridging Act for the years 2023 through 2027.

If a taxpayer believes that the actual return in a year is lower, they must demonstrate this. To do so, an amendment adopted by the House of Representatives requires the use of the so-called Actual Return Statement (Opgaaf Werkelijk Rendement, OWR). The form to be used to submit the statement is available since 10 July 2025. However, the Tax Administration expressly requests taxpayers not to complete their Actual Return Statements until they have received notification that their forms can be submitted. If the tax assessment for a year is still pending, a period of 12 weeks applies for submitting the Actual Return Statement. This period is extended to 26 weeks if the return is submitted by a tax intermediary. The usual terms apply for Actual Return Statements submitted in objection proceedings or after a request for an ex officio reduction. Additional documents may be sent to the Tax Administration to substantiate the actual return up to six weeks after submission of the Actual Return Statement.

All taxpayers who were eligible for legal redress under the judgment of 24 December 2021 are entitled to provide rebuttal evidence, provided they lodge an objection or request an ex officio reduction in good time. Hence, legal redress does not cover income tax assessments for the years 2017 through 2020 that were already irrevocably determined on 24 December 2021.

Legal redress based on actual return

Substantively, the legislator is looking to closely align with the legal rules formulated by the Supreme Court in 2024, regarding the legal redress to be granted:

• All assets belonging to Box 3 must be taken into account, even if they were not acquired until during the year.
• The nominal return in one year is key, without taking into account inflation. Results from other years are excluded from the comparison.
• The actual return includes both regular benefits from and changes in value of possessions and debts in box 3, but is at least nil. Expenses are not eligible for deduction, with the exception of interests on debts.
• As for the moment when regular benefits are earned, this is aligned with the cash accounting system. Non-arm’s length transactions can be adjusted to arm’s length conditions.
• The own use of box 3 properties is excluded from the levy until the year 2025. The Supreme Court argued that the legislator needs to provide rules for this. These will now be implemented, but not retroactively. The market rental value must be taken into account for the years 2026 and 2027, i.e., the rent that can be stipulated when letting under normal circumstances.
• The change in assets in any year is determined by reducing the fair market value of the possessions and liabilities in box 3 at the end of the year by this value at the beginning of the calendar year. Next, the outcome will need to be adjusted for the value of deposits and withdrawals made during that year.
• Determination of the (un)realised changes in value with respect to residential property is aligned with the WOZ system. The initial value is the WOZ value (the value for the purposes of the Valuation of Immovable Property Act) determined for the levy year (value reference date: 1 January of the previous calendar year). The final value is the WOZ value of the following calendar year (value reference date: 1 January of the levy year). On disposal or acquisition during the calendar year, the change in value is allocated to the seller and the buyer in proportion to time.
• Expenditures relating to improvement or expansion of assets must be treated in the same way as the original investment. As a result, an increase in value resulting from additional investments does not qualify as a return. However, the taxpayer must demonstrate reasonably that this situation occurs. When it comes to residential property this is a complex issue, because the change in value is based on the difference in WOZ value at the beginning and the end of a year. There is only room for rebuttal evidence if the WOZ value has been determined by applying Article 18(3)(c) of the Valuation of Immovable Property Act, in accordance with the condition of the property at the beginning of the year for which that value applies.
• When determining the actual return, existing exemptions in Box 3 must be taken into account, with the exception of the tax-free assets. The exempt component of the actual return on green investments is determined by dividing the exempt amount by the total green investments on the reference date. However, the tax-free allowance and the debts threshold are disregarded.
• If the resident tax liability arises or, contrarily, ends in the course of the year, the capital gain in a year will be determined in accordance with those dates.
• Tax partners can divide the joint base for savings and investments, i.e., also the actual return in a year is allocated to both partners based on this allocation key.

Sources:

• Parliamentary Papers II 2024/2025, 36 706, no. 2 (bill) and no. 3 (Explanatory Memorandum)
• https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/berichten/nieuws/box-3-herstel-van-start