Box 3 time proportionate allocation

Further explanation of box 3 calculation for non-resident taxpayers

The Tax Office has agreed with the Ministry of Finance that it is to be recorded in the legislation that the income from savings and investment (per asset) is to be recalculated. There is now more clarity over the calculation and application of the box 3 exemptions.

The Tax Office has agreed with the Ministry of Finance that it is to be recorded in the legislation that the income from savings and investment (per asset) is to be recalculated. The non-resident taxpayer must recalculate the yield basis (asset minus liabilities) and apply the full fixed interest rate of 4%. The adjustment is intended to deal with the problems of houses which are sold during periods abroad better, but also applies if such sales have not been made.

The regulation/agreement was included in a memo to their software developers. Given that in the memo only examples were included whereby the changes/sales took place on the first day of the month and no strange events occurred, we have formulated four questions.
After questions from the software developers the Tax Office has on August 9, 2011 given more clarity over the calculation and application of the box 3 exemptions. The situation described by us whereby 90% of an individual’s world income is obtained in the Netherlands (and therefore they have no option but to be treated as a resident taxpayer) is not discussed explicitly, but should match the example opting for resident taxpayer status. The regulation is illustrated by the following examples, and it must be noted that the M-form (for further confusion) still requests the value at January 1:

1. Immigration to the Netherlands on September 12, 2011. The yield basis at 01/01/2011 consists only of savings of € 600,000. In the M-form assets in the domestic period must be indicated as: bank and savings € 600,000 x 3/12 = € 150,000. The period in the month of September 2011 therefore should not be taken into account.

2. Emigration from the Netherlands on September 12, 2011. The yield basis at 01/01/2011 consists only of savings of € 600,000. In the M-form assets in the domestic period must be indicated as: bank and savings € 600,000 x 8/12 = € 400,000. The period in the month of September 2011 therefore should not be taken into account.

3. Immigration to the Netherlands on September 12, 2011 with choice for treatment as a resident taxpayer. On January 1, 2011 the full amount of the bank and savings are indicated, i.e. € 600,000. For the question of income over which the Netherlands may not apply any income tax (i.e. the period abroad), the taxpayer fills in 9/12 x € 600,000 = € 450,000. The Netherlands then has € 150,000 left over.

4. The tax-free allowance will also be time proportionately reduced. In the example of immigration to the Netherlands on September 12 the tax-free allowance is € 20,875 x 3/12 = € 5,196. When opting for treatment as a resident taxpayer the tax-free allowance is not to be reduced time proportionately.

Source: fiscaaltotaal