What is Box 3 and why is it relevant for foreign property?
Box 3 of Dutch income tax covers wealth from savings and investments. Foreign property falls into this category: it does not matter whether your home is in Torrevieja, Marbella, or Dubai Marina. The Dutch tax authority taxes it as part of your worldwide wealth.
The tax is not levied on actual returns (rental income or appreciation), but on a fictitious return, the so-called deemed return (forfaitair rendement). This system has undergone major changes in recent years following Supreme Court rulings.
Deemed return 2026: current rates
Since the legislative change following the Christmas Ruling (2021) and the Repair Act ruling (2024), the Tax Authority applies a deemed return that varies by asset category. For foreign property, the 'other assets' rate applies.
| Asset category | Deemed return 2026 |
|---|---|
| Bank deposits (savings) | 0.36% (as of fiscal year 2026) |
| Other assets (incl. foreign property) | 6.04% (as of fiscal year 2026) |
| Debts (deduction) | 2.47% (as of fiscal year 2026) |
| Box 3 tax rate | 36% (as of fiscal year 2026) |
Source: Belastingdienst.nl, Tax Plan 2026, Staatsblad 2025, 498.
Exemption method: avoiding double taxation
If you own property in a country with which the Netherlands has a tax treaty, you may be able to use the exemption method with progression reserve (vrijstellingsmethode met progressievoorbehoud). This prevents you from paying tax both in the Netherlands (Box 3) and abroad (local taxes) on the same property.
The exemption works as follows: the foreign property is included when determining total Box 3 income (progression reserve), but the portion attributable to the foreign property is then exempted. The result: you pay the higher rate corresponding to your total wealth, but not on the property portion itself. You claim the exemption through your income tax return, section 'Prevention of double taxation'.
Source: Belastingdienst.nl, art. 10 Besluit voorkoming dubbele belasting 2001, NL-Spain Tax Treaty art. 23.
Supreme Court rulings: what is changing?
The Box 3 system has been the subject of legal battles since 2017. The Christmas Ruling of December 24, 2021 (ECLI:NL:HR:2021:1963) held that the old deemed return system violated the right to peaceful enjoyment of property (art. 1 Protocol 1 ECHR) when the fictional return was structurally higher than the actual return.
On June 6, 2024, the Supreme Court ruled again (ECLI:NL:HR:2024:705) that the Repair Act (Wet rechtsherstel box 3, 2022) also fell short, as it still used deemed returns for 'other assets' instead of actual returns. The Supreme Court held that taxpayers who can demonstrate that their actual return was lower than the deemed return are entitled to a calculation based on actual return.
The legislature is working on a new Box 3 system based on actual returns, expected from 2028. Until then, the deemed return system applies, but with the possibility of objection if your actual return is lower. For property owners, this means: if your property generates no rental income and does not appreciate, you may successfully object to the Box 3 assessment.
Source: Supreme Court ECLI:NL:HR:2021:1963 (Christmas Ruling), ECLI:NL:HR:2024:705 (Repair Act ruling), Kamerstukken II 2025/26, 36685.
Box 3 changes timeline
Tax treaties: Spain versus Dubai
The tax treaty determines in which country you pay tax and how double taxation is avoided. The situation differs significantly between Spain and the UAE.
Netherlands - Spain
The Netherlands-Spain tax treaty (Trb. 1971, 144, amended 2006) assigns the right to tax immovable property to the country where the property is located (art. 6). The Netherlands grants an exemption in Box 3 through the exemption method with progression reserve (art. 23). In practice: your Spanish property is included in the Box 3 calculation, but the attributable portion is exempted. You therefore do not pay double tax on the same property.
Source: Treaty NL-ES Trb. 1971, 144 and Trb. 2006, 83, art. 6 and 23.
Netherlands - UAE
The Netherlands-UAE tax treaty (Trb. 2008, 123, revised 2010) is more limited. Property in the UAE may be taxed by the UAE (art. 6), but since the UAE does not levy property tax, there is in practice nothing to offset in Box 3. The Netherlands grants an exemption in theory, but the financial effect is negligible: you pay the full Box 3 tax in the Netherlands. The only relief is that Dubai does not levy income tax on rent, so your actual return leaves the country untaxed.
Source: Treaty NL-UAE Trb. 2008, 123 and Trb. 2010, 37, art. 6 and 22.
Calculation examples: Box 3 tax on foreign property
The examples below show the Box 3 tax for three scenarios. The calculation: (market value - mortgage) x deemed return (6.04%) x tax rate (36%). Note: the tax-free allowance in Box 3 is EUR 57,000 per person (EUR 114,000 for tax partners) as of fiscal year 2026 and is not included in these simplified calculations.
| Apartment Torrevieja | Villa Costa del Sol | Apartment Dubai Marina | |
|---|---|---|---|
| Market value (Jan 1) | EUR 200,000 | EUR 500,000 | EUR 350,000 |
| Mortgage debt | EUR 140,000 | EUR 300,000 | EUR 175,000 |
| Net wealth in Box 3 | EUR 60,000 | EUR 200,000 | EUR 175,000 |
| Deemed return (6.04%) | EUR 3,624 | EUR 12,080 | EUR 10,570 |
| Box 3 tax (36%) | EUR 1,305 | EUR 4,349 | EUR 3,805 |
Simplified calculation. Tax-free allowance (EUR 57,000 p.p.) not included. For Spanish property, the Box 3 amount may be (fully or partially) exempted through the tax treaty. For Dubai property, the exemption is limited. Not financial advice.
Important notice
This guide is for informational purposes only and does not constitute tax advice. Box 3 legislation changes frequently. Consult a tax specialist with experience in international property for your personal situation. Zaminor is not a tax advisor and does not provide tax advice.
Frequently asked questions about Box 3 and foreign property
Do I need to declare my foreign property in my Dutch tax return?
Yes. As a Dutch taxpayer, you are required to report worldwide wealth, including foreign property. You declare the market value as of January 1 in Box 3, minus any mortgage debt.
How do I determine the market value of my foreign property?
For Spanish property: use the valor de referencia catastral or a recent valuation. For Dubai property: the DLD transaction value or a RICS valuation. The Tax Authority generally accepts recent purchase prices or independent valuations.
Can I deduct Spanish IBI and IRNR in Box 3?
No. In Box 3, no costs are deducted; the tax is calculated on the net asset value. The exemption method prevents double taxation, but you cannot claim local taxes as an expense in the Dutch return.
What if I don't rent out my property? Do I still pay Box 3?
Yes. Box 3 tax is levied on wealth (the value of the property), regardless of whether you receive rental income. The deemed return applies to unrented properties as well.
Can I object if my actual return is lower than the deemed return?
Yes. Following the Supreme Court ruling of June 2024, you can object if you can demonstrate that your actual return (rental income plus appreciation) was lower than 6.04%. The Tax Authority assesses this per return.
Will Box 3 change in the future?
Yes. The legislature is working on a new Box 3 system based on actual returns, expected from 2028 (Wet werkelijk rendement). Until then, the current deemed return system applies.
Is there a difference between Spanish and Dubai property in Box 3?
The Box 3 calculation is identical for both countries. The difference lies in double taxation relief: for Spanish property, you can obtain an exemption through the tax treaty. For Dubai property, this exemption is limited because the UAE does not levy its own property tax.
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