Box 3 taxes and the 30% ruling in 2025 and beyond

Box 3: Tax on savings, investments, and other assets

Box 3 of the Dutch income tax pertains to income derived from savings and investments, rather than earned income or business profits. This includes assets such as bank savings, shares, a second home, bonds, and cryptocurrencies. It should be noted that your primary residence is exempt from Box 3 and is taxed differently under Box 1.

Debts can be deducted from the value of your assets under specific conditions. Kindly note that debts for the primary residence are not deducted from your assets as these fall under Box 1. 

Box 3 in 2025 and 2026

For the year 2025, the tax-free allowance (heffingsvrij vermogen) in Box 3 is €57.684 per individual, or €115.368 for fiscal partners. This allowance decreases in 2026 to €51.396 per individual and €102.792 for partners. Tax is levied on the value of assets exceeding these thresholds.

Instead of taxing the actual return on investments, the Dutch tax system uses a deemed or "fictional" return model. Different assumed returns apply to savings and investments based on typical earning profiles. In 2025, these fictitious rates are set at 1,44% for savings, 5,88% for investments, and 2,62% for debts. The tax rate on the deemed return remains 36%.

In 2026, the system is set to adjust, with the deemed return on investments and other assets increasing substantially, projected at 7,78%. Coupled with the lowered exemption limits, this will increase the Box 3 tax burden for many taxpayers. 

Box 3: Transition and compensation

Following a 2021 Supreme Court ruling (the "Kerstarrest"), the Dutch government acknowledged that the Box 3 tax calculation did not accurately reflect taxpayers’ actual returns. To remedy this, the government introduced provisional compensation schemes for the years 2017 through 2022, allowing taxpayers experiencing returns below the fictionally assumed rates to claim refunds.

Until a new system is fully implemented, the current rules remain a bridging measure. Starting from 2028, the government plans to tax the actual returns on assets rather than fictional returns, bringing more fairness and accuracy to wealth taxation.

From the summer of 2025, taxpayers eligible for additional compensation can declare their actual returns via a dedicated form on the tax authority’s website. 

The 30% ruling

The 30% ruling is a highly beneficial tax facility available to expatriates recruited from abroad due to their specialised knowledge and expertise that is scarce in the Dutch labour market.

How the 30% ruling works

Under the 30% ruling, eligible employees may receive up to 30% of their gross salary tax-free as a reimbursement for extraterritorial living costs. These are expenses arising from working outside one’s home country, such as higher housing costs, international schooling, and moving expenses.

This tax-free allowance reduces the taxable income on which payroll tax is withheld, significantly increasing the net monthly salary for expats. 

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30% Ruling requirements in 2025 

To qualify, expats must typically meet several criteria:

• The employee was recruited from abroad or assigned to the Netherlands.
• The employee must work for an employer that is registered with the Dutch tax office.
• Both the employer and the employee have agreed in writing that the 30% tax ruling is applicable.
• In the two years preceding their employment in the Netherlands, the employee resided more than 150 kilometres from the Dutch border. Within those two years, the employee may have spent less than eight months living closer to the border.
• The employee possesses specific expertise, demonstrated by meeting the salary requirement. The taxable annual salary must exceed €46.660 (2025), or €35.048 for employees under the age of 30 with a master’s degree. 

The ruling applies for a maximum period of five years.

30% Ruling changes for 2025 and beyond

For the years 2025 and 2026, the generous 30% tax-free allowance remains fully intact, maintaining its value and appeal. However, starting January 1, 2027, the maximum tax-free allowance will be reduced to 27%. Additionally, salary thresholds for eligibility are expected to increase by roughly 10%.

Employees who already benefit from the 30% ruling before 2024 will be covered by transitional provisions, allowing them to keep the 30% allowance for the remainder of their eligibility period.

In 2025, the option to opt for a tax-free reimbursement based on actual extraterritorial costs remains available. This means expats able to prove their real expenses for living abroad, instead of the fixed 30% allowance, can claim this alternative, provided they submit evidence and comply with the rules. 

What should expats do now?

When it comes to the 30% ruling and Box 3, here is what you should do now:

• Review eligibility annually: Check if you and your employer still meet the conditions for the 30% ruling, especially salary thresholds and duration.
• Prepare for Box 3 changes: Take stock of your assets and debts, especially before January 1, 2025, to accurately report the value for tax purposes.
• Claim compensation if eligible: If you believe your actual returns are lower than the fictional assumed returns in Box 3 for previous years, file for compensation using the official tax forms starting in summer 2025.
• Plan for 2027 adjustments: Understand that from 2027, the 30% ruling allowance will be reduced to 27%, and the salary criteria will become more stringent. Budget accordingly. 

For personalised advice regarding your specific situation, consulting with tax professionals or your company’s HR and payroll experts is highly recommended.