Lawmakers in the Netherlands have advanced plans to introduce a 36% tax on unrealized capital gains beginning in 2028, a move that would apply to stocks, bonds, and cryptocurrencies. The proposal would require investors to pay taxes on the paper appreciation of assets, even if they have not sold them.
Under the new framework, investors whose portfolios show gains at the time of annual tax assessment could face levies based on market value increases rather than realized profits. The measure represents a significant shift from traditional capital gains taxation, which typically applies only when assets are sold.
Supporters argue the reform is designed to create a more transparent and consistent system for taxing wealth and investment income.
Why the Netherlands is changing its tax model
The proposal follows years of legal and political debate over how investment income is taxed in the Netherlands. Courts have previously ruled that elements of the country’s existing “Box 3” wealth tax system unfairly assumed a fixed return on assets, prompting calls for reform.
Policymakers say taxing unrealized gains at 36% more accurately reflects actual market performance and could help stabilize government revenues. The plan would cover a broad range of financial assets, including publicly traded equities, fixed-income securities, and digital assets such as cryptocurrencies.
As previously covered, several countries have explored alternative wealth taxation models in response to rising asset prices and widening income inequality. However, directly taxing unrealized gains remains controversial due to valuation complexity and liquidity concerns.
Concerns over capital flight and investor behavior
Critics warn that the proposed tax could alter investor incentives and encourage capital outflows. By taxing gains that have not been converted into cash, investors may be forced to sell assets to cover tax liabilities, particularly during volatile market conditions.
There are also fears that high-net-worth individuals and internationally mobile investors could relocate assets or residency to more tax-friendly jurisdictions. Analysts note that in an increasingly globalized financial system, capital can move quickly in response to policy changes.
The inclusion of cryptocurrencies in the tax regime adds another layer of complexity, given the asset class’s volatility and cross-border nature. Investors may face significant tax bills following market rallies, even if prices subsequently decline before assets are sold.
Supporters of the reform argue that a clear and rules-based system could reduce uncertainty compared with the current framework. Still, the debate highlights the tension between revenue generation and competitiveness in financial markets.
If implemented as planned in 2028, the 36% levy would place the Netherlands among the more aggressive European jurisdictions in taxing investment gains. The final impact will depend on implementation details, market conditions, and whether investors choose to adapt or exit.
