Netherlands moves to soothe rich investors over tax on paper profits
Most countries only impose levies once gains are realised
The Dutch government is preparing to soften a contentious tax that would hit wealthy investors and has placed the Netherlands at the centre of a global debate over levies targeting the rich.
Dutch investors are balking at plans that would subject them to an annual 36 per cent tax on their paper profits on liquid assets such as savings, equities, bonds and cryptocurrency, even if they are not sold.
The regime, due to come into force in January 2028, would make the Netherlands an outlier among most advanced economies in its taxation of unrealised gains.
The measure was pushed by a hard-right coalition in which Geert Wilders’ populist Party for Freedom was the biggest member.
Prime Minister Rob Jetten’s coalition, which came into power in February and whose Liberal D66 party was not in the previous government, is now preparing a series of concessions following sustained criticism from investors and business groups, who argue the measure risks undermining the country’s attractiveness as an investment destination.
“The government takes these concerns seriously. It is exploring ways to soften the consequences of the accrual-based tax and is working out possible options, which will be presented before the end of June,” a spokesperson for the Minister for Tax Affairs, Tax Administration and Customs told the FT in a statement.
While the concessions, if approved, are expected to soften the regime’s impact, they are unlikely to satisfy demands for the capital gains accrual tax under the “Box 3” system, which sets out how wealth from savings and investments is treated, to be scrapped immediately.
The Dutch dispute is the latest example of the political challenges governments face changing taxes that hit the wealthy. In California, proposals for a “billionaire’s tax” have opened a sharp political divide. Several European countries, including Norway and France, have adjusted their wealth tax regimes after pushback from investors.
The Dutch reforms, first put forward in May 2025, are intended to address historic unfairness in the previous system, under which investors were taxed on notional returns — an approach that courts ruled unlawful. But the proposed replacement, which treats liquid and illiquid assets differently, has sparked an outcry over its workability, fairness and complexity.
Taxing unrealised gains creates “severe liquidity issues and administrative burdens for retail investors”, said Daniël van Meijgaarden, head of international tax and legal at aaff, a Dutch accounting firm.
The government is considering the introduction of loss carry-back, allowing investors to offset losses against previously taxed paper gains. It is also examining a new definition for start-ups and scale-ups, a major point of contention in determining which assets would be exempt from the accrual tax.
Under the proposed legislation, start-ups, scale-ups and immovable property would be exempt from the accrual-based regime and instead be taxed when gains are realised.
Frans Heeren, managing partner at Dutch accountancy firm Vermetten, welcomed that the Dutch government was working on concessions but said concerns remained about the new system.
“People are happy that [adjustments] are being introduced,” he said. “But the main issue remains whether unrealised gains should be taxed at all.”
The concessions are expected to come as the Dutch upper house, the Senate, wrestles with the proposed legislation, which passed the lower house in February under the previous government.
The changes will also require a fresh vote in the lower house. Jetten’s minority government will need the votes of some opposition parties to get the changes approved.
Some senators are questioning whether the bill should proceed in its current form or whether the cabinet should be forced to accelerate a more fundamental shift towards taxing gains only when they are realised — the standard approach in most countries.
The government earlier this year signalled that it intends to move to a capital gains tax system “as quickly as possible” but has resisted pressure to abandon the 2028 introduction of the accrual tax, arguing it would leave a hole in the budget.
The uncertainty surrounding the legislation has already “demoralised investors”, said Harsh Patel, founder and chief executive of Water & Shark, an accountancy and legal firm. “It is not right to tax something that has not come into your pocket.”
The new Box 3 system applies to Dutch private taxpayers. It will not apply to institutional and many foreign investors, said the government.