Photo: Jarretera/Shutterstock
A controversial political plan has been reversed. The Dutch government is scrapping the planned increase in the high notional return rate used to tax investments in Box 3. Initially, a hike from 5.88% to 7.78% was planned for 2026, but The Hague has now backed away from the proposal.
The proposal for a tax increase led to a storm of criticism in the House of Representatives. So far, the cabinet has failed to come up with a suitable alternative that everyone agrees on. Moreover, the bill may now be passed on to other groups. The question is: who will ultimately pay the price?
Box 3 Increase Scrapped After Political Storm #
The cabinet has plans for a new Box 3 system. Its implementation was originally scheduled for 2027 but has now been postponed by a year. This has consequences, as it creates a €2.55 billion budget gap in 2027. To fill this shortfall, the government wanted to tax investors and savers more heavily. Self-employed individuals with their own pension pots and other Dutch citizens would also feel the effects. But exactly how remained under discussion.
After intense criticism from the House of Representatives, the government has scrapped the planned increase in Box 3. However, the pain hasn’t disappeared. The bill now lands on the doorstep of homeowners who have (almost) fully paid off their mortgages. This group will lose their tax advantage on the notional rental value of their home more quickly.
Notional Rental Value to Disappear: Here Are the Consequences #
The notional rental value falls under the ‘Wet Hillen’ legislation. It was initially set to be phased out gradually by 2048. However, the phase-out is being accelerated from 3.33% per year to 4.8% per year. As a result, the tax advantage will disappear seven years earlier, in 2041.
The notional rental value is an amount that the Tax Authorities treats as a kind of fictitious income for someone who owns a home. Those with a nearly paid-off mortgage currently pay less notional rental value than other homeowners. With the elimination of this scheme, homeowners will lose money to the tax authorities years earlier.
What Is Confirmed for Box 3 in 2026? #
Not only is the higher notional return rate off the table, but a reduction of the tax-free asset threshold from €57,684 to €51,396 has also been scrapped. This change follows an amendment that removed both measures from the Tax Plan.
For 2026, the notional return rate in Box 3 for other assets is fixed at 6%. The rates for savings and debts, however, have not yet been set. Those percentages will only be definitively determined after the end of 2026.
The tax-free asset threshold will actually increase next year: to €59,357 or €118,714 for fiscal partners.
Homeowners Feel the Pain #
Homeowners who have already (almost) paid off their mortgages will feel the accelerated phase-out of the Wet Hillen in 2026. For a home with a WOZ (property valuation) of €500,000 and a fully paid-off mortgage, the discount on the notional rental value decreases from €1,283.33 to €1,257.67.
In total, this means approximately €25 less advantage, which translates to about €10 in extra tax in 2026 at the Box 1 tax rate. For homes with a higher WOZ value, the effect is greater, while for a partially paid-off mortgage, it remains smaller.
The Tax Authorities will start monitoring crypto transactions from 2026. What does this mean for you as an investor?