The Netherlands intends to impose taxes on unrealized capital gains across various investments, including stocks, bonds, and cryptocurrencies, raising concerns about a potential outflow of capital.
Reports suggest that most lawmakers in the Dutch parliament are inclined to support amendments to the country’s Box 3 asset tax system, which requires taxation on both realized and unrealized gains, even if the investments have not been sold (NL Times).
This proposal emerged post court rulings that invalidated the previous system for depending on assumed returns rather than actual gains. The Tweede Kamer has once again discussed the proposal, with caretaker State Secretary for Taxation, Eugène Heijnen, facing over 130 inquiries regarding the plan.
While various lawmakers expressed apprehensions regarding the plan, many indicated their support, citing a potential loss of approximately 2.3 billion euros (roughly $2.7 billion) annually should the implementation be postponed further.
Dutch Parties Support Tax on Unrealized Gains
Under the suggested policy, those investing in stocks, bonds, and cryptocurrencies would be subjected to annual taxation on their paper profits. Heijnen mentioned to parliament that taxing solely realized gains would be preferable, but the government does not see it as feasible before 2028. Given the financial constraints, further delays were dismissed.
Several parties like the People’s Party for Freedom and Democracy (VVD), Christian Democratic Appeal (CDA), JA21 (Right Answer 2021), and the Farmer–Citizen Movement (BBB) are anticipated to support the bill.
Left-leaning parties such as Democrats 66 (D66) and the GreenLeft–Labour Party express support for the amendments, asserting that taxing unrealized gains simplifies administration and prevents significant budget deficits.
Importantly, the altered Box 3 system would advantage real estate investors, permitting deductions for expenses and taxation solely when profits are realized, although second homes would incur an additional tax for personal use.
Criticism from the Crypto Community
The tax initiative has provoked substantial backlash from investors and figures in the cryptocurrency space, who caution that it could accelerate capital exodus.
Michaël van de Poppe, a well-known Dutch crypto analyst, lambasted the proposal as “insane,” asserting it would markedly increase annual tax liabilities, compelling residents to vacate the country. He remarked, “It’s no surprise people are leaving, and honestly, they are justified to do so.”
“Taxes on unrealized gains and wealth could equate to this century’s Boston Tea Party or Bolshevik moment,” another criticized.
