Tax on capital 2021 and 11 tips to save tax
In this article we will go over the box 3 taxes, the equity capital base for the allowances, and we have a few tips to save in box 3.
Box 3 capital
First, what exactly are we talking about? You will have to pay taxes over the interest of your capital. The interest is fictitious and is determined by the legislator. You do not pay taxes over the capital part, but you do pay taxes on anything added to that capital. Until 2017, the fictitious interest was always 4% and from 2017 there are different interest rates. The higher your capital the higher the fictitious interest, the higher…. Well, you get it.
The graduated scale for 2021. (reference date January 1st, 2021 per adult):
- That is 0,00% for capital up to 50.000 euro (tax-free capital)
- That is 1,9% for capital between 50.000 and 100.000 euro
- That is 4,5% for capital between 10.000 and 1 million
- That is 5,69% for capital above 1 million euro
The tax rate for the fictitious interest is 31%.
Equity capital base allowances
Except the healthcare and childcare allowances, the allowances all have an equity capital base. Your entitlement to the allowance is dependent on this equity capital base. When you are above that base, you are not entitled to that specific allowance.
Capital limit 2021 (reference date: January 1st 2021) allowances
|
|
No allowance partner |
Allowance partner |
|
Rent allowance* |
€31.340 |
€62.680 |
|
Healthcare allowance |
€118.479 |
€149.819 |
|
Child-based budget |
€118.479 |
€149.819 |
*Pay attention: if you have co-inhabitants, then per co-inhabitant €31.340,- capital more.
Save on taxes Box 3
Below 11 tips to save tax. These are meant for when you have capital above €50.000.
Four easy tips
You will have to pay taxes over your capital. The Tax Authorities will look at your balance on January 1st 2021. So the lower your balance, the less you pay taxes.
Tip 1: Spend money before the end of the year: purchase that car, jacket or holiday trip
Tip 2: Withdraw cash before the end of the year: You are allowed to have €534 in cash per person
Tip 3: Relieve your debts: pay small debts. For example: part of your college debt, tax assessment or credit card
Tip 4: Gifts: Make a donation or gift to a charity
Three more tips: Easy, but pay attention!
Tip 5: Relieve your debts: pay off the mortgage of your (main) residence.
Pay attention: there may be a penalty for relieving your mortgage debt early, check this with your bank.
Tip 6: Make a donation
Pay attention: You can donate up to €2.208 to anyone, tax-free. When you donate more, you should check what the law says and do not donate money to your children that are minors.
Tip 7: Pay ahead: health care premiums, interest, tax assessments etc.
Pay attention: You will need to follow up or you will make undue payments
The last four Tips: Tricky tips for when December has arrived
Tip 8: Sell your house after January 1st 2021. When you sell your house in December, the overvaluation will be added to your capital and included in the taxes in Box 3.
Tip 9: Do not rent out your own home: When you rent out your house before January 1st 2021, the home you are renting out is included in Box 3 for tax purposes.
Tip 10: Officially commit to a relationship: marry or sign a registered partnership with someone with no or little capital. This way you increase your tax-free capital.
Tip 11: Invest in a green fund. The government has designated certain funds with a tax benefit. Pay attention though; there are limits to the exemptions and the capital will be included for the purpose of the equity capital base for allowances. You will also need to make sure you do this in time.
These are the designated funds:
- ABN AMRO Groenbank bv
- ASN Groenprojectenfonds
- Regionaal Duurzaam 1
- Stichting Groenfonds
- Stichting NOTS RE Investments
- Triodos Groenfonds nv
- Groenwoningen Fonds