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Counter-Evidence in Box 3: The Meaning of OWR and Actual Returns

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Box 3 OWR: Actual Return in Practice

The Box 3 system is shifting toward taxation based on actual return: the real, nominal return on assets instead of a fictitious forfait. For the years 2017-2027, you can voluntarily report this via the OWR form (Opgaaf Werkelijk Rendement) to receive compensation if your actual return is lower than the forfaitary one. From 2028 onward, this becomes the main rule under a new legislative proposal.

What is “actual return”?

Actual return comprises the total nominal result on all Box 3 assets, including savings, investments, real estate, and loans. It includes both direct return (interest, rent, dividends; only interest costs on debts are deductible in the OWR phase) and indirect return (realized and unrealized price and value changes, such as WOZ mutations for properties).

The calculation is based on the entire Box 3 assets (no deduction of tax-free allowance), nominal per calendar year (no inflation adjustment), combining positive and negative results within that year. For OWR (2017-2027). From 2028 onwards, loss carryforward in box 3 is likely to be permitted, because the new system is based on a capital accrual tax in which negative returns qualify as offsettable box-3 losses.

Why this policy shift? (June 2024 rulings)

On June 6, 2024, the Supreme Court ruled in the D-Day judgments that the Box 3 levy, even under the Remediation Act and transitional legislation, remains in violation of the ECHR (property rights and non-discrimination) if the forfaitary return exceeds the actual return. Taxpayers must be able to prove their actual return is lower, after which only that lower return is taxed. This led to the Box 3 Counter-Evidence Act and the OWR form for years 2017-2027.  

Actual Return Box 3 Act (from 2028)

The cabinet submitted the Actual Return Box 3 Act in May 2025. Main rule: capital accretion tax on direct and indirect nominal return at one rate (~36%), with tax-free income (€1,250-€1,800 per person) instead of tax-free assets. From 2028: loss carryover and broader cost deductions (incl. investment costs). Originally planned for 2026/2027, now earliest January 1, 2028 if adopted before March 2026. Final implementation depends on parliamentary process.

Article 23 VAT permit for a cash flow advantage with import

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Article 23 Permit: Liquidity Advantage for Importers

When importing goods from countries outside the European Union, in addition to customs duties, VAT is also payable on import. The VAT payable on import and any customs duties must be paid to Customs when the so-called import declaration is submitted. The VAT paid on import can be claimed back as input tax at a later date through the regular VAT return (if you are entitled to deduct VAT). This means that this VAT is actually paid in advance and is only received back at a later date. This creates a liquidity disadvantage. An Article 23 license can help to solve this problem.

What is an Article 23 license?

With an issued Article 23 permit, it is possible to defer the payment of VAT payable on import to the time of the VAT return. If you are entitled to deduct VAT, this VAT can be deducted immediately in the same return as input tax. This means that you do not have to pay any VAT in advance. This is of interest, among other things, for entrepreneurs who regularly import goods from countries outside the European Union. The license must be applied for in writing.

Conditions

There are a number of conditions that must be met in order to be eligible for an Article 23 license:

  • You must be resident in or established in the Netherlands;
  • You must regularly import goods from countries outside the European Union;
  • You must maintain a separate administration from which it is easy to determine how much VAT you must pay on import.

If you do not meet the first condition, it does not mean that you cannot obtain a license. As a foreign entrepreneur, you can also apply for an Article 23 license through a tax representative.

Liquidity advantage

An Article 23 license can provide a liquidity advantage for entrepreneurs who import goods from countries outside the European Union. The entrepreneur does not have to pay the VAT on import in advance, but can instead deduct it in the VAT return. This means that the entrepreneur only has to pay the VAT when he sells the goods.

Processing in the VAT return

If an entrepreneur has an issued Article 23 license, the VAT payable on import can be declared in the regular VAT return under item 4a (purchases from countries outside the EU). The VAT payable, as stated in item 4a, can then be deducted again in item 5b (input tax). Of course, this only applies if you are generally entitled to deduct input tax.

Applying for an Article 23 license

The application for an Article 23 license can be submitted in writing to the tax office. The application must contain the following information:

  • Company name
  • VAT number
  • Type of goods
  • Value of the goods
  • Frequency of import
  • Countries of origin

The Tax Authorities will assess the application within eight weeks.

Fiscal Substance

From experience, we know that obtaining a VAT number can be difficult for foreign entrepreneurs. In principle, it is only possible to obtain a VAT number if you are a Dutch entrepreneur or have a Dutch fiscal representative. However, we have previously managed to secure a VAT number for foreign entrepreneurs without a fiscal representative. Would you like to know more about what we can do for you? Click on the contact form at the bottom of this article.

Conclusion

An Article 23 license can be an interesting option for entrepreneurs who regularly import goods from countries outside the European Union. The license can provide a liquidity advantage, as the entrepreneur does not have to pay the VAT on import in advance.

Do you need help applying for an Article 23? Contact TaxAble

 

Deposit annual accounts with Dutch Chamber of Commerce

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According to Title 9, Book 2 of Dutch civil code, every Dutch private or public limited company must prepare and deposit annual accounts with the Dutch Chamber of Commerce.

Deadline to deposit the annual accounts with the Chamber of Commerce
A company must file its annual accounts on time. The annual accounts must be deposited with the Chamber of Commerce within eight days after adopting the annual accounts in a shareholder’s resolution. The deadline for depositing the annual accounts depends on the legal structure of your business, but at the most this is within 12 months from the end of the financial year. We have the required software and certificates to assist with depositing of annual accounts with the Chamber of Commerce, we can also prepare the shareholder’s resolution.

We can assist with depositing annual accounts at the Chamber of Commerce

Required details of the deposited annual accounts
The annual reporting regulations offer exemptions with regard to the details and content of the annual accounts and the filing thereof. If and which exemption applies to a limited depends on the size of the company.

The four different sizes are micro, small, medium and large. At a minimum the balance sheet is to be deposited for a micro size company, from there the required details only increase per following size. In the table down below you can see which criteria will need to be met. A company falls into a certain category if it meets at least two of the three criteria in the table during two consecutive years.

€                                                            Micro                    Small                     Medium size                     Big

Assets                                                 ≤350.000             ≤6.000.000          ≤20.000.000                       >20.000.000

Net revenue                                     ≤700.000             ≤12.000.000       ≤40.000.000                       >40.000.000

Number of employees                 <10                        <50                        <250                                     ≥250

(< = less than, ≤ = less than or equal to,  > = more than, ≥ = more than or equal to)

An example of micro to small:
A company has assets on the balance sheet for an amount of €200.000 (micro), a net revenue of 5 million (small) and 5 employees (micro) in the years 2019 and 2020. The company therefore qualifies as micro as it meets two of the three criteria for two consecutive years.

In 2021 the company has assets on the balance sheet for amount of € 500.000 (small), a net revenue of 5 million (small) and 5 employees (micro). In this case the company meets two of the three criteria for a small company. However, the criteria for a small company has not yet been met for two consecutive years. Therefore 2021 will be considered a transition year and the company will remain micro in the year 2021. In 2022 if the company publishes figures that are considered small then that means that from then on the company will be considered small because now it has met two of the three criteria for two consecutive years.

Being considered micro, small, medium or large has consequences for the way companies have to detail their annual accounts and the filing thereof. Do you want to know which exemptions with regarding the organization of the annual accounts apply to your Limited? Don’t hesitate to contact us! We are happy to help. We offer a one stop shop for tax, accountancy and legal services.

Tax in the Netherlands on real estate owned by non residents

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Personal income tax in the Netherlands on Dutch real estate owned by non residents 

When owning real estate located in the Netherlands, and the owner is a non resident of the Netherlands, Dutch personal income tax applies on this real estate.

This is because the Dutch tax law for non-residents specifically mentions that Dutch real estate is subject to Dutch tax liability. This Dutch tax liability is allowed in the tax treaties as entered into by the Netherlands.

To determine the applicable tax burden, a distinction is to be made between active and passive ownership of Dutch real estate. In case of active ownership the net rent and capital gain is taxed at the progressive tax rates. Passive income is subject to equity tax.

We can advise on your situation, prepare your Dutch tax return and act as your contact person with the tax office, so any letters from the Dutch tax office directly reaches our office and we can act accordingly. If required we can also assist in order to obtain the mandatory BSN (Dutch social security number).

 

Make use of the One Stop Shop to avoid having to register VAT per country

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Make use of the One Stop Shop to avoid having to register VAT per country 

Foreign VAT will have to be charged by the entrepreneur to the consumer (B2C) according to the VAT rules of the country where the consumer is located. Instead of reporting in every EU country where the consumer is located, it is possible for the supplier to make use of the One Stop Shop (OSS) scheme. The supplier needs to register in a single EU country and can use this opportunity to account for VAT in all EU countries where the consumers are located. This is a major advantage as it significantly reduces administration costs.

There are three variants of the OSS available: 1. The Union scheme 2. The non-Union scheme and 3. The Import Scheme (IOSS) for distance sales under €150. As an entrepreneur outside the EU, it is also possible to make use of the OSS. In principle, the choice of country is free, but if the company has a permanent establishment in the EU, the OSS must be applied for in the country in which the permanent establishment is located. For the non-EU entrepreneur, it may be more advantageous not to register for the OSS if the entrepreneur expects to incur costs on which foreign VAT is charged to him.

The services that qualify for the OSS are: digital services, services that are taxed based on the legislation of the country of the consumers and services that take place in that country. Examples are intra-community distance sales (sales to consumers where the goods are sent from one EU Member State to another) and online services (such as subscription-based platforms).

For EU entrepreneurs, there is a cumulative threshold of €10,000 per year; one entrepreneur meets this threshold if, for example, €5,000 in digital services and €5,000 in intra-Community distance sales have been converted.

There is no threshold for non-EU entrepreneurs; they can always apply for the OSS. If, for example, sales are made from an EU country via a permanent establishment, the €10,000 threshold must again be met and may not be included in the non-EU company’s OSS declaration.

Would you like to make use of the OSS, then TaxAble can assist you! We can assist with amongst others:

  • Registration for the OSS with the Dutch tax authorities;
  • Making quarterly reports for the VAT;
  • Submitting the quarterly reports for the VAT;
  • Take over complete correspondence with the tax authorities.

Changes in Dutch tax 2024 for companies and individuals

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Comprehensive Introduction to the 2024 Tax Changes – An In-Depth Analysis

Major changes are planned in Dutch tax legislation in 2024. These adjustments are crucial for both private individuals and companies. Below is an even more comprehensive overview of the most significant changes, delving deeper into the background, possible consequences and broader context of these changes.

Increased Rates in Box 2 (substantial interest holding) and Box 3 (equity tax)

Box 2: The increase in the rate in box 2 to 33% for income above € 67,000 is a significant change for shareholders with a substantial interest. This change may lead to a reconsideration of dividend strategies and the timing of distributions. It is crucial for shareholders to review their tax planning in light of this change, especially given the potential impact on the net income and cash flow of their companies. This change may also impact decisions on corporate investment and restructuring.

Box 3: The increase in the rate in box 3 to 36% is a direct response to the long-standing discussion about the fairness of taxation on fictitious returns. This increase could have a significant impact on the net returns of savers and investors. It is advisable for taxpayers to reconsider their investment portfolios, especially in light of the new focus on actual returns. This could lead to a shift in investment strategies, placing more emphasis on wealth preservation and efficient tax planning.

SME profit exemption and IACK: What does this mean for Entrepreneurs and Families?

The adjustment of the SME profit exemption to 13.31% is a welcome relief for small and medium-sized businesses. This change can help reduce the tax burden on smaller businesses and encourage them to continue investing and growing. However, it is important that SMEs are aware of this change and adjust their tax strategies accordingly to take full advantage of the new regulations.

The postponed abolition and phase-out of the IACK until 2027 gives families more time to adapt. It is important for working parents to understand how this phase-out will impact their net income and adjust their financial planning accordingly. These changes could especially impact families with a single income or where one parent works part-time.

The Impact of the Retrenchment of the 30% Scheme and the Lowered Threshold for Excessive Borrowing

The reduction of the 30% ruling may have consequences for the attractiveness of the Netherlands as a work location for international talent. Companies that rely on expats may need to revise their compensation packages to accommodate these changes. This could lead to a reassessment of overall compensation strategies and possibly even a reconsideration of the use of international staff.

At the same time, lowering the threshold for excessive borrowing to €500,000 requires attention from directors and shareholders. It is crucial to reconsider the structure of personal and business finances to avoid unwanted tax consequences. This change could have significant implications for the company’s liquidity planning and overall financial strategy.

Energy Tax and Excise Tax Rebates: Direct Impact on Households

The reduction of energy taxes and the extension of excise duty discounts are measures that provide direct relief to households. These changes can help offset rising costs of living, especially at a time when energy prices are volatile. It is important for consumers to understand how these changes may affect their monthly expenses and to adjust their budgets accordingly.

Conclusion

The tax changes for 2024 are diverse and have a broad impact. They touch on various aspects of tax practice, from personal income tax to corporate taxes. It is essential that both individuals and companies are aware of these changes and prepare for them. A proactive approach and timely planning are crucial to optimally navigate the new tax landscape.