What is the 4% notional income in box 3?

In box 3, what exactly is this 4%? If you own property, is this 4% of the actual value of the property, or 4% on the potential rental income?

In box 3 a certain deemed income is taxed. For this a percentage of 4% has been chosen. A percentage which was relatively low in 2001 when the profit rates on savings and investments were higher than 4%. Nowadays the interest on bank savings is much lower than 4% and the same counts for dividends. The State Secretary of Finance however confirmed in June 2013 that he is not willing to reduce the percentage of 4% to a lower percentage. 

The percentage of 4% is taken from the value of the savings and investments on 1 January of the applicable tax year. It is irrelevant what the real income has been (interest, dividends, capital gains) and also what the real expenses have been to gain this income. 

Getting back to your question, 4% of the actual value of the property will have to be declared, not 4% of the (potential) rental income. This is done to prevent discussions about the real income, expenses etc.