International Tax Panorama

On Thursday, the Dutch House of Representatives passed a law that will change how the country taxes investment gains, including those from crypto assets. The new rules will start on January 1, 2028.

The new law, called the Actual Return in Box 3 Act (Wet werkelijk rendement box 3), will introduce a capital gains tax on most assets, such as stocks, crypto, and bonds.

With the new rules, residents will pay about 36% tax each year on their actual returns from savings and investments, even if they do not sell their assets. This means taxes will apply to both income received and increases in asset values, including gains that have not been realized.

For example, if a Dutch resident’s share portfolio increases by €10,000 in a year, the tax authority will count that gain as taxable income, even if the investor has not sold any shares.

Real estate and startup shares will have different rules. For these, tax is mainly charged when a profit is made, which is called capital gains tax. However, income like rent or dividends from these assets will still be taxed in the year it is received.

Parliament also agreed to shorten the law’s review period from five years to three. This change is meant to allow quicker fixes if any problems come up after the law is introduced.

The bill also lets investors carry forward losses without limit, so they can use losses from bad years to offset future gains. There is also a €1,800 tax-free return threshold to protect small savers.

The bill must still be approved by the Senate before it becomes law.

Why Was the Bill Introduced?

The bill was created to replace the old system, which taxed investment income based on assumed returns. The Dutch Supreme Court ruled this system unconstitutional in a series of decisions starting in December 2021.

After the Dutch Supreme Court struck down the old system, the government no longer had a legal way to tax investment returns. This has cost the treasury “an estimated €2.3 billion per year” in lost revenue.

Why is the Bill Being Criticized?

The bill has faced criticism since it was passed. Here are some of the main concerns:

1. Concerns About Capital Flight

Critics say the new rules could cause investment capital to leave the Netherlands for countries with lower taxes. Investors might move their portfolios, or even themselves, to places where taxes are only paid when gains are realized.

2. Taxation of Unrealized Gains

A main criticism is that the law would tax ‘real returns,’ which can include gains that have not been realized. This means investors could owe tax just because their portfolio’s value went up on paper, even if they did not sell anything or receive any cash.
For many small investors, this creates a problem. Their investments may have grown in value, but they might not have enough cash to pay the tax bill.

3. Pressure to Sell Investments Annually

Investors might feel they have to sell some of their investments each year just to pay their taxes, since tax is owed even if nothing is sold. Critics say this could hurt long-term investment plans and discourage people from saving and investing in the markets.

4. Limited Ability to Offset Later Losses

Another concern is that investors might pay tax on gains that later disappear if the market drops. Critics say the system does not clearly allow for losses to be balanced against earlier taxes paid.

5. Departure From Common European Practice

Critics also point out that the proposed system is different from how most other European countries handle investment taxes.

• Norway taxes capital gains upon realization (when the asset is sold).
• Germany applies a flat withholding tax on investment income, also triggered at the point of sale.

In contrast, the Dutch system would check portfolios every year and tax any changes in value, even if no assets were sold. Some people see this as out of step with common European practices.

8. Rapid Growth of the Domestic Crypto Market

Data from De Nederlandsche Bank shows that indirect crypto investments by Dutch companies, institutions, and households grew from €81 million at the end of 2020 to about €1.2 billion by October 2025. Critics say that taxing this fast-growing and volatile asset every year could have wider effects on the economy.