If you own foreign real estate that falls under Box 3, it’s important to pay close attention when completing the OWR-form (Opgaaf Werkelijk Rendement). The so-called counter-evidence scheme allows you to report your actual return if it is lower than the notional (forfaitary) return set by the Dutch Tax Authority. While this may seem advantageous at first, it doesn’t always work out that way in practice. In particular, when you own foreign real estate, the outcome can even be unfavorable.

How does Box 3 work with foreign real estate?
The Netherlands taxes your entire Box 3 wealth, including assets located abroad — such as a holiday home. At the same time, the foreign country may also levy tax on that same property. To prevent double taxation, the Netherlands generally grants a tax credit (aftrek ter voorkoming van dubbele belasting, or simply: “tax credit”).

The size of this tax credit depends on a ratio (fraction) used in a formula. Depending on which system applies — the notional return system or the actual return system—the ratio is calculated differently.

Notional return system: Under this system, the value of your assets is what matters most. So even if you earn no income from your holiday home, you still receive a partial tax credit, because the property counts toward your total wealth based on its value.

• Numerator: notional return from your foreign assets
• Denominator: notional return from your total assets

You always receive some tax credit, even if the foreign property generates no income.

Actual return system: Here, the focus is on the real income from your foreign property. If your holiday home produces no income (for example, because you use it solely for personal enjoyment and the value has not increased), it does not count. The foreign income is then zero, meaning you receive no tax credit.

• Numerator: actual return from your foreign assets
• Denominator: actual return from your total assets

If there’s no income from your foreign assets, the numerator is €0 — and you receive no tax credit.

What does this mean in practice?
It might seem logical that reporting a lower actual return is always beneficial — after all, less income means less tax. But in reality, it can turn out differently.

For instance, suppose you own a second home abroad that you do not rent out. This generates no income. Until 2026, you also don’t have to report any income for personal use. If the property’s value hasn’t increased either, it doesn’t count as income, and the numerator in the tax credit formula becomes zero. You then receive no tax credit for foreign tax, whereas under the notional return system you would — since that system considers the property’s value.

It’s also worth noting that determining the correct value of a foreign property and thus the actual return can be quite challenging.

From 2026 onwards, this changes: you’ll need to report a deemed rental value for personal use (approximately 5.06% of the property’s value). At that point, the foreign property will again count toward your actual return.

The takeaway
When comparing both Box 3 systems — notional return versus actual return — it may initially seem more advantageous to choose the actual return method, since you might pay less tax on lower returns. However, if you own foreign real estate, you must also recalculate the tax credit for double taxation under both methods.

This tax credit may turn out to be significantly lower under the actual return method than under the notional return method — or even zero.
You might pay less tax on your actual return, but also receive less (or no) tax credit. The result: your total Box 3 tax could end up higher. Careful comparison is therefore essential before making your choice.

How can Novera assist you?
Calculating the actual return in Box 3 — especially when foreign real estate is involved —is complex. It’s therefore wise to review each tax year separately to determine whether the actual return or notional return method is more favorable.

Novera can support you in this process. We assess your situation, identify which data are needed, and calculate both the actual return and the tax credit. If the actual return method proves more beneficial, we handle the further communication with the Tax Authority — ensuring that you don’t miss out on any potential tax advantage.