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The Netherlands will begin taxing unrealized capital gains on cryptocurrencies, stocks and bonds annually starting January 1, 2028, under a controversial reform aimed at closing a €2.3 billion budget gap that has sparked warnings of capital flight from the country’s investment community.
The move toward taxing unrealized gains stems from Supreme Court rulings that found the former Box 3 regime, which taxed investors on an assumed return regardless of actual performance, violated property rights by levying taxes on gains investors never realized.
Caretaker State Secretary for Taxation Eugène Heijnen has acknowledged to lawmakers that a pure realized-gains system would be preferable, but said it isn’t considered practical before 2028.
As a result, the government is pushing ahead with the annual unrealized gain tax as a stopgap to prevent further revenue shortfalls.
Support spans several political parties. Members of the People’s Party for Freedom and Democracy (VVD), Christian Democratic Appeal (CDA) and other major factions have signaled support for the reform, arguing it simplifies administration and avoids costly revenue lapses.
Left-leaning parties such as Democrats 66 and GreenLeft–Labour also back the proposal, seeing it as a more equitable way to tax wealth.
“Taxing only realized returns would be preferable, but given legal and fiscal constraints, this approach is the most workable solution before 2028”
A Dutch finance official told parliament, according to media reporting.
The proposed tax has triggered a sharp backlash from investors, particularly in the crypto community. Critics warn that levying taxes on paper gains could distort investment behavior, and reduce liquidity.
Prominent crypto analyst Michaël van de Poppe branded the plan insane in social media comments, arguing it would impose heavy annual tax burdens and incentivize capital flight.
Financial advisors and expatriate investors have echoed those concerns, cautioning that taxes on unrealized gains could force holders of volatile assets like Bitcoin to sell portions of their portfolios solely to meet tax obligations.
Some grassroots petitions and online forums are already urging the Dutch government to adopt a pure realized gains model instead.
Economists are also divided. Some argue taxing unrealized gains unfairly penalizes investors during bull markets without regard to liquidity constraints, while others say a properly calibrated annual system.
“Tax systems should evolve with markets, but policymakers must balance fairness with economic competitiveness,”
A tax policy expert at a European university said, noting that overly aggressive wealth taxes can drive businesses and capital elsewhere.
If adopted, the Dutch proposal would position the Netherlands among the first jurisdictions to adopt an annual unrealized gains tax on digital assets and traditional investments alike.
This shift could influence tax debates in other European countries grappling with how to integrate crypto into established fiscal frameworks.
The change highlights the increasing likelihood that governments will treat cryptocurrencies more like conventional financial instruments for tax purposes—potentially narrowing arbitrage advantages but also raising compliance and planning challenges.
Industry groups and international tax bodies will likely watch the Dutch rollout closely, as the outcome may shape broader discussions on wealth, investment and digital asset taxation across the EU.
