Non-resident taxpayers Box 3 income
Previously the average of the capital on January 1 and December 31 was used to calculate the notional yield from savings and investments. Now from 2011 – also for non-residents – only one reference date applies for box 3 income: January 1 of the calendar year. According to the Income Tax Act 2001, in the event of commencement or ending of tax obligation during the year, unless due to death, the Box 3 income must be adjusted time proportionately but the Tax Office has received authorization to deviate from this stance.
Because the assets belonging to Box 3 for non-resident taxpayers must be monitored individually, in some cases more than one notional yield would apply. This could include a situation whereby a non-resident taxpayer owns more than one property on January 1 and during the calendar year has sold one or more of these properties. The Tax Office has agreed with the Ministry of Finance that it is recorded in the legislation (for non-resident taxpayers) that income from savings and investments (per property) will be reduced. The phrase “according to time” is to be scrapped from Article 7.7, paragraph 4 of the Income Tax Act 2001 and the Tax Office can then request the details that are needed for a calculation of the notional yield from savings and investments. The Tax Office will, if necessary, request the non-resident taxpayer to calculate the yield basis (assets minus debt) and will apply the full rate of return of 4% on this.
The above ruling/agreement is recorded in a rather restricted memo to the software developers. In the memo are only examples where changes/sales are made on the first day of the month. This produces the following questions:
• Is it still the case that components of calendar months will be neglected by the reduction of the yield basis as the Act currently allows? It seems to us that this will still be the case.
• What happens if you opt for resident taxpayer status pursuant to Article 2.5 Tax Act 2001? We believe that the Tax Office is not able to avoid also applying this ruling to resident taxpayers. The fact that it means calculation problems alone for the Tax Office takes away any possible fiscal discrimination.
• How will situations in which at least 90% of an individual’s income is earned in the Netherlands and therefore they are without a choice as to whether they are treated as a resident taxpayer be dealt with? For these situations, the above applies even more so because equal treatment is ensured from EU case law.
• Currently the tax-free allowance, the child benefit allowance and the elderly allowance are taken into account, then income is reduced proportionally over time. Because the examples do not indicate how such exemptions are handled, it is unclear whether the exemptions are to be applied over time any longer. In our view, the exemptions (if no adjustments are made) will be completely applied because the Tax Office wanted a different calculation method, and therefore must also bear the consequences.