The compensation of tax losses for individuals in the Netherlands

As a result the mechanism of the Dutch Income Tax Act only income from Box 1 (income from labor or main residence) or Box 2 (income from substantial shareholding) can result in tax losses. The income from Box 3 (income from savings and investments) is determined on a deemed basis, as a consequence of which no negative Box 3 income can occur. 

As a general rule, losses resulting from one Box cannot be offset against positive income from another Box.

A loss resulting from a certain category of Box 1 income can in essence be compensated with positive income originating from other categories of Box 1 income in the same year. To the extent the positive Box 1 income in a particular year is not enough to absorb the Box 1 losses of that year, the excess can in essence be offset against positive Box 1 income from the preceding three years (carry back) and the following 9 years (carry forward).

Special rules apply for the compensation of losses from substantial shareholding (Box 2 income).

The carry forward or carry back of tax losses must be claimed in the annual income tax return and will be confirmed in the assessments imposed after filing of the income tax return. No separate application is required.