The Netherlands moved closer to implementing one of the world’s most unusual capital taxation systems on February 12 when the House of Representatives approved legislation taxing unrealized gains on stocks, bonds, and cryptocurrencies.
The Actual Return in Box 3 Act now advances to the Senate, where parties that supported the measure also hold a majority. The government plans to implement the law on January 1, 2028.
Dutch residents will pay a flat 36% tax on annual investment returns exceeding €1,800, including unrealized capital gains. The tax applies whether investors sell their assets or not, breaking from traditional capital gains taxation.
The legislation replaces a system based on fictional investment returns that the Dutch Supreme Court ruled unconstitutional in 2021 and 2024. The government faces an estimated €2.3 billion annual revenue loss from delays in implementing a replacement.
Despite widespread criticism, a parliamentary majority signaled support during a January 19 debate where lawmakers posed more than 130 questions to State Secretary for Finance Eugène Heijnen, according to Dutch parliamentary records.
The new law establishes what tax advisors call a “capital growth tax.” Investors must report annual changes in asset values plus income from dividends and interest. Unrealized losses can offset future gains but cannot be applied backward to previous tax years.
Real estate and startup shares face different treatment. The government will tax rental income annually, but assess capital gains only on property sales. Startup companies qualify for this exemption if they are less than five years old and generate under €30 million in annual revenue. Primary residences remain exempt under Box 1 income tax rules.
Critics warn the policy could trigger capital flight, while others have described the tax as punitive, arguing it forces investors to pay levies on paper gains they may never realize.
The House of Representatives must pass the final bill by March 15, 2026, to give banks, insurers, and the Dutch Tax Administration sufficient time to modify their computer systems before implementation.
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