Plan Capital Gains Tax

The government plans to levy tax on the actual return in box 3 from 2025. With a so-called capital gains tax, tax will be levied annually on the actual yield of the capital.

What does that mean?
Wealth has been taxed in a certain way for years. People with savings therefore paid too much tax, while property owners paid relatively little due to the strong house price increases. A new system will therefore probably be introduced from 2025 in which the government will levy tax on the return that people have actually achieved. They also want to rectify the past, although there is no ideal solution for this. In addition to advantages, all options that have been examined also have disadvantages. This means that the government will have to make difficult choices in the coming period.

real estate investors
A fundamental and very far-reaching point for real estate investors is the choice of the State Secretary for the instrument of the capital gains tax. The value development of the assets is determined and taxed from year to year, regardless of whether that value development has been realized through sale. In years with sharply rising real estate values, this can lead to the capital yield tax being higher than what the rental of the real estate has yielded after deduction of operating costs. In that case, if a real estate investor does not have other, more liquid forms of capital, he will first have to sell the real estate in order to be able to pay the capital gains tax. On the other hand, in the years in which the value of the real estate decreases, the real estate investor accrues a tax-deductible loss that can be set off against previous years and/or the future yield that is taxed in Box3.
And now?
Urgent legislation is needed to be able to properly levy tax in box 3 again in 2023 and 2024. The cabinet proposes that this emergency legislation be aligned with the eventual design of the restoration of rights. It is still being investigated whether it is possible to introduce a wealth tax as of 2023, but this was not feasible from a technical point of view. A temporary wealth tax does not make sense if from 2025 the actual return will be taxed on the basis of capital growth.


Future (2025 and beyond)
The government's aim is to have a new box 3 system based on actual returns from 2025. What this new system could look like has also been sent to the House. The government proposes to design the new box 3 system as a capital gains tax, whereby an annual tax is levied on regular income (such as interest, dividend, rent and lease less costs) and the development of the value of assets (such as exchange rate gains or losses of stocks and property appreciation or depreciation).
For example, the value development of a share portfolio is taxed from year to year and not only in the year in which part of the shares are sold. In this way, long-term deferral of taxation is avoided.
Source: Central Government and Real Estate Interest