The recent passage of significant legislation by the Dutch House of Representatives will set a new precedent for how the country taxes investment gains, particularly affecting assets like cryptocurrencies. Starting in January 2028, the Actual Return in Box 3 Act will implement a capital growth tax that applies to various asset classes including stocks and bonds. This reform represents a fundamental shift in tax policy.
The new legislative framework stipulates that residents will incur taxes annually at a rate of approximately 36% on realized and unrealized investment income. This means that even if an asset has not been sold, increases in its value will still be taxed. This approach contrasts sharply with traditional tax systems that typically tax profits only upon sale, thus raising concerns among investors.
Assets such as real estate and startup shares will be subject to different tax regulations. In these instances, taxes will primarily apply when a profit is actually realized, known as capital gains tax. However, income generated from these investments, such as rent and dividends, remains taxable in the same year it is received, which could lead to cash flow issues for investors who may have unrealized gains.
The proposed changes have garnered substantial criticism from the cryptocurrency community and other stakeholders, primarily because they could coerce individuals into paying taxes on profits that they have not yet actually cashed out. Additionally, the volatile nature of crypto assets poses a risk where asset values may fluctuate, potentially rendering investors unable to meet tax obligations.
In response to these concerns, Parliament has made adjustments to the bill, notably shortening the review period from five years to three. This alteration aims to facilitate timely modifications if challenges emerge during the implementation phase.
Moreover, a coalition of major political parties in the Netherlands, namely D66, VVD, and CDA, has expressed intentions to gradually transition towards a capital-gains taxation model. Draft legislation is anticipated by Budget Day 2028, whereby taxes will be levied only upon the sale of assets. This shift is designed to alleviate immediate cash-flow burdens for investors while decreasing short-term tax revenue for the government.