A second home in Spain and Dutch box 3 tax: what you need to know

Box 3 is the part of Dutch income tax that covers savings, investments, and other assets. A second home in Spain that you do not use as your main residence belongs to those assets as real estate abroad.

The current system does not look at what you actually earn from it, but at an assumed return on your assets. For box 3 it therefore does not matter, in principle, whether you use the property yourself or rent it out. You are liable if you are a Dutch resident. If you move to Spain yourself, your situation changes, see our article on emigrating to Spain.

For real estate abroad, the value in the ordinary course of business, in other words the market value, on 1 January of the tax year applies. That is not the Dutch WOZ value and not the Spanish cadastral value either. Keep the purchase deed, and if in doubt have a valuation or a comparison with recent sales made, so you can substantiate your value.

If you financed the property partly with a mortgage, that debt can reduce your box 3 assets, to the extent it exceeds the threshold for debts. What you end up paying depends on the total of all your assets and debts, and on the tax-free allowance that is set each year.

Spain levies its own taxes on your property: IBI, non-resident income tax, and possibly wealth tax. The Netherlands and Spain have a tax treaty to prevent you from paying twice on the same assets. How exactly that works out in box 3 depends on your situation and on the current rules.

Have this assessed by a tax adviser with knowledge of both countries at the first return after your purchase. We work with independent tax advisers who do this every day and are happy to put you in touch with them.

Box 3 has been amended several times in recent years, partly due to Supreme Court rulings on the notional return. The government is working on a new system in which the levy is based more closely on the actual return. Under current plans that starts in 2028, but the details may still change.

So do not rely blindly on last year's figures, and keep an eye on developments. For a property you rent out, the actual return may matter in a new system, so your rental figures (rent, costs, vacancy) should be kept in good order.

Keep the purchase deed (escritura), the notary's invoice, valuation material, and the annual statements of IBI and community fees. Declare the property in your next return and include any Spanish mortgage as a debt.

Also include the Dutch tax in your overall picture before you buy, alongside the Spanish costs from our cost overview. That way you know in advance what the property will cost you each year.