The Netherlands plans to tax unrealized capital gains on a range of investments including stocks, bonds and cryptocurrencies, sparking warnings of capital outflows.
A majority of lawmakers in the Dutch parliament appear ready to support changes to the country’s Box 3 asset tax system that would require investors to pay an annual tax on both realized and unrealized gains, even if the asset has not been sold, NL Times reported on Tuesday.
The plan is based on court rulings that have overturned the existing system of relying on assumed rather than actual profits. This week, the Tweede Kamer (House of Representatives) debated this proposal again, asking over 130 questions to the Deputy Secretary of State for Taxation, Eugène Heijnen.
While many lawmakers acknowledged flaws in the plan, most signaled they would support it, citing an estimated revenue loss of 2.3 billion euros ($2.7 billion) in the event of a further delay in implementation.
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Dutch parties refund tax on unrealized profits
Under the proposal, investors in stocks, bonds and cryptocurrencies would be subject to an annual tax on paper gains. Heijnen reportedly told parliament that taxing only realized gains would be preferable, but the government does not consider this feasible before 2028. Given the pressure on public finances, further delays have been ruled out.
Several parties, including the People’s Party for Freedom and Democracy (VVD), Christian Democratic Appeal (CDA), JA21 (Right Answer 2021) and the Freedom Party of the Farmers and Citizens Movement (BBB) (PVV) are expected to support the bill.
The report shows that left-wing parties such as Democrats 66 (D66) and GreenLeft–Labour (GroenLinks–PvdA) also support the changes, arguing that taxing unrealized profits is simpler to manage and avoids solemn budget shortfalls.
In particular, the revised Box 3 regime would be more favorable to property investors, allowing costs and taxes to be deducted only after profits have been realized, although second homes would be subject to an additional charge for personal apply.
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Dutch tax on unrealized gains sparks backlash against cryptocurrencies
The tax plan has drawn acute criticism from investors and cryptocurrency industry figures, who warn the move could accelerate capital flight.
Prominent Dutch cryptocurrency analyst Michaël van de Poppe called the plan is “insane,” arguing it will sharply raise annual tax burdens and force residents to leave the country. “It’s no wonder people are leaving the country and, honestly, it’s completely right,” he wrote.
“Taxes on unrealized profits and wealth may resemble the Boston Tea Party, the Reign of Terror, or the Bolshevik moment” – another user he wrote.
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