Cabinet backtracks on box 3 tax plans for small savings

The cabinet has promised to rewrite part of its new tax plan for savings and investments, just two days after announcing it, so that fewer people with modest savings are impacted.

Finance minister Eelco Heinen, of the right-wing liberal VVD, made the commitment in parliament on Thursday after MPs from both opposition and coalition parties attacked the plan.

“I have discussed this with the prime minister and with the coalition,” the Financieel Dagblad reported him as saying. “We are prepared to make changes. There will be a proposal to spare small savers.”

Under the plan presented on Tuesday, people would pay 36% tax on returns above €1,000 a year from 2028, down from €1,800 in the earlier version of the reform. Heinen also said he still believed the plan would exempt couples with up to €100,000 in savings.

No funding yet
The minister said he did not yet know how the cabinet would make up the shortfall. Small savers were the main source of funding for the box 3 overhaul, which reports say could cost up to €20 billion.

“We don’t have many levers to pull,” Heinen said. “And every choice you make is enormously complicated.”

The cabinet will send the bill to the Council of State, the government’s senior advisory body on legislation, without an alternative source of funding. Heinen said he would come up with proposals by October 12, when MPs debate the cabinet’s annual package of tax changes.

He also said he would look again at a temporary measure for next year, which would cut the tax-free allowance from €59,357 to €30,846 per person and raise the tax rate. You can find out more about how the changes would affect you in our box 3 explainer.