Netherlands 36% unrealized gains tax to take effect in 2028; crypto investors need to plan ahead

The Dutch Parliament is pushing forward with a radical tax reform. Starting from 2028, all asset holders, including Bitcoin, will be required to pay a 36% annual tax on unrealized gains, even if they haven’t sold. This is not a virtual tax rate but a real cash outflow. For global crypto investors, this policy signal warrants serious attention.

Core Policy Details

What is the “Box 3 Actual Return Tax Law”

This reform is called the “Box 3 Actual Return Tax Law” (Wet werkelijk rendement Box 3), which calculates asset appreciation annually and taxes unrealized gains at a rate of 36%. This means that assets held by investors, such as Bitcoin, stocks, etc., will be taxed each year based on their book gains, regardless of whether they are actually sold.

The policy stems from an important background: the Dutch courts previously ruled that the government’s practice of taxing based on virtual returns was illegal. This new bill is the government’s response, although many lawmakers believe the design is complex and flawed in principle. However, because delaying implementation would cost the government €2.3 billion annually, most lawmakers are still prepared to vote in favor.

Specific Impact Scope

• Covered Assets: cryptocurrencies, stocks, and all capital assets
• Tax Rate: 36%
• Implementation Date: starting 2028
• Taxation Target: all investors holding assets, regardless of nationality
• Taxation Method: annual calculation, taxing book gains

Actual Impact on Crypto Investors

Cash Flow Pressure

The most direct impact of this policy is on cash flow. Suppose an investor holds Bitcoin worth €1 million, which appreciates by 10% (€100,000) in a year. The investor would need to pay €36,000 in taxes. Crucially, this tax must be paid in cash, not deducted from the assets.

This is especially unfavorable for long-term holders. If an asset appreciates significantly in a given year, the investor may need to sell part of their holdings to pay the tax, which could trigger additional realized gains and tax complexities.

Changes in Investment Decisions

This policy may alter investor behavior:

• Shortening holding periods: investors might prefer quick profits rather than long-term holding
• Asset allocation adjustments: shifting toward assets with lower appreciation expectations or safe-haven assets
• Geographic arbitrage: high-net-worth investors may consider relocating to jurisdictions with lower tax rates
• Strategy optimization: seeking legal tax planning methods

Market Impact Analysis

Impact on the Dutch Crypto Market

The Netherlands is one of Europe’s key centers for the crypto industry, with many investors and institutions. This policy could lead to:

• Capital outflows: high-net-worth investors and institutions may transfer assets to regions with more favorable tax regimes
• Reduced market liquidity: fewer long-term holders, potentially decreasing market participation
• Exchange relocations: some exchanges might consider re-registering elsewhere

Broader Policy Demonstration Effect

This is the first major attempt globally to tax unrealized gains. If the implementation aligns with the Dutch government’s expectations, other European countries and even regions worldwide might follow suit. This “policy demonstration” effect warrants ongoing attention.

According to recent reports, discussions on crypto asset regulation and taxation within the EU are ongoing. The Netherlands’ move could serve as a new reference case.

Investor Response Strategies

Short-term considerations

• Monitor the final voting results in the Dutch Parliament (expected soon)
• Understand detailed implementation rules and transition arrangements
• Assess the tax impact of assets held in the Netherlands

Mid-term planning

• Consider geographic diversification of assets to reduce risks in a single jurisdiction
• Consult professional tax advisors for legal tax planning options
• Optimize portfolio structure, balancing appreciation potential and tax costs

Long-term perspective

• Keep track of evolving global crypto tax policies
• Evaluate the attractiveness of different regions for crypto investors
• Prepare contingency plans for potential policy changes

Summary

The Netherlands’ reform represents a new direction in global crypto asset regulation. Although a 36% tax on unrealized gains is aggressive, it reflects the government’s emphasis on crypto wealth and pursuit of tax fairness.

For crypto investors, this is not just a Dutch issue but a global signal. Over the next two years, investors should: first, closely follow the final details and implementation methods; second, evaluate their tax exposure across different jurisdictions; third, proactively plan response strategies.

Whether supporting or opposing this policy, its impact will be profound. It also serves as a reminder that crypto asset taxation is moving from the fringe to the mainstream, and investors’ tax compliance awareness needs to be elevated accordingly.