Tax relief on green investments

If you make a green investment (or open a green savings account), you invest in funds and banks that participate in sustainable projects. These projects take place at a national or international level and focus on aspects like environmental conservation or improving working conditions. Not all sustainable investment funds on the market qualify for additional tax relief. You can only claim tax relief on your green savings account or investment if it has been issued a ‘groenverklaring’ (green declaration) by the Dutch government.

The Dutch government sets a personal allowance on which you pay no tax for green savings accounts and green investments in Box 3. In 2024, this allowance was €71,251 (€142,502 for tax partners). You only pay tax on the value of your green investments or green savings above that threshold. The personal allowance for ‘ordinary’ savings accounts and investments is €57,000 (€114,000 for tax partners). All savings and investments above that threshold are subject to Box 3 tax.

This tax relief applies to the amount of the green investments you had on 1 January 2024. In your tax return, first deduct your personal allowance from your green investments. If you haven’t used up all of your personal allowance, deduct the remaining part from your green savings. Your personal allowance is never more than the total value of your green investments and green savings. If you make the green investments after 1 January 2024, you won’t be entitled to your personal allowance in 2024. However, you may be able to use your personal allowance in 2025.

There is more tax relief besides the higher personal allowance on green investments and savings: you may also deduct an amount from your overall Box 3 tax. This tax deduction amounts to 0.7% of your green investment and savings allowance. The paragraph below explains this tax relief based on an example calculation.

Based on current tax rates (2024), you can calculate the maximum tax relief you can claim on your green savings or green investments. Remember: green investments and green savings are subject to different tax burdens and tax credits from ‘ordinary’ investments. Table 1 below shows a calculation of the maximum tax relief you can claim based on the rates and personal allowances for 2024. Some figures are estimates; the final figures will be confirmed after 2024.

Table 1

The total tax relief can range from a maximum of around €1,500 (almost 1.1%) for green savings and up to around €4,100 (around 2.9%) for green investments. Your personal allowance for green savings may increase if the ‘fictitious return’ increases. This is the return that the Dutch Tax and Customs administration assumes you gain from your savings or investments. It will be confirmed near the end of 2024. And of course, you’ll also need to add interest on savings and any return on investments.

Sadly, the Dutch government’s set of tax measures for 2024 includes some that have a negative impact on the current green tax relief. Starting on 1 January 2025, the personal allowance will decrease to €30,000 (€60,000 for tax partners). From 2027 onwards, the personal allowance will be abolished and changes will be made to the tax credit for green investments.

This means that you must have green savings or investments on 1 January 2025 to qualify for this tax relief, which will be lower. Table 2 below shows a calculation of the maximum tax relief you can claim based on the rates and allowances released for 2025. Some figures in this table are estimates, such as the fictitious interest rate on savings. The final figures will be available after 2025.

Table 2

The return on sustainable investments varies considerably from fund to fund and you need to make sure investing is right for you. The interest on green savings accounts, such as ABN AMRO’s Green Savings Deposit, is often higher than the interest on ordinary savings accounts. This higher interest rate plus the additional tax relief makes sustainable investments even more appealing.

The tax relief you can claim depends on your personal circumstances, how much you invest, and whether your investments or savings are green. Although some tax relief is being phased out, you still profit – all while making a positive impact on the environment and society.

You should only invest money that you do not need and that is surplus to your buffer for unforeseen expenses. While investing can be profitable, it also involves risk. You could lose all or part of your initial investment.