Netherlands to Tax Unrealized Investment Gains in Radical 2028 Reform

2026-01-20 digital

The Hague, Tuesday 20 January 2026
In a significant fiscal pivot, the Dutch parliament intends to tax unrealized investment gains annually from 2028, replacing the unlawful fictitious return model despite warnings of capital flight.

A Grudging Consensus on Fiscal Reform

Following a heated debate in the Tweede Kamer on Monday, 19 January 2026, a parliamentary majority has signalled its readiness to support the controversial Wet werkelijk rendement box 3 (Actual Return Act), aiming for implementation by 2028 [1][9]. This legislative overhaul is designed to replace the current system based on fictitious returns, which the Supreme Court has repeatedly ruled unlawful [1][9]. However, the political support is best described as a “grudging agreement”; parties ranging from the VVD to the PVV are backing the bill primarily because further delays would incur a substantial cost to the treasury, estimated at approximately €2.3 billion to €2.35 billion per year [1][3][9]. To meet the 2028 implementation target, the House must vote in favour before 15 March 2026 [9].

The Mechanics of the ‘Paper’ Tax

The core of the reform involves a shift to a vermogensaanwasbelasting (asset growth tax), which levies a 36% tax on the annual increase in value of assets such as shares, bonds, and cryptocurrencies, regardless of whether these gains have been realised (liquidated) [1][8][9]. Under the new regime, the tax-free allowance is replaced by a maximum tax-free return of €1,800; any return above this threshold faces the 36% levy [8]. This contrasts sharply with the outgoing system, where wealth was taxed based on a fictitious income—historically assuming a return of approximately 7% taxed at 36%—a method that led to legal challenges when actual returns fell short of these assumptions [6]. Critics argue this creates a liquidity trap, forcing investors to potentially sell assets to pay taxes on “paper” profits [1][6].

Stifling the Digital Economy and Unicorns

The implications for the Netherlands’ digital economy—spanning AI, SaaS, and Fintech—are profound. Industry experts warn that taxing unrealised gains is “disastrous” for founders and employees in high-growth scale-ups [6]. For instance, if a Series A investment in a local tech startup appreciates significantly on paper as the company approaches “Unicorn” status, shareholders would face massive annual tax bills despite having no liquidity [6]. This policy contradicts the growing “sense of urgency” regarding technological self-reliance and could force Dutch tech companies to seek capital from American or other European investors to cover tax liabilities, thereby diluting local ownership and control [6]. A 2023 report by Techleap had previously recommended a Capital Gains Tax (tax upon realisation) to avoid this exact scenario, arguing that the current proposal risks driving the high-growth sector abroad [6].

Disparities Between Asset Classes

A significant point of contention is the divergent treatment of different asset classes. While equity holders face annual taxation on unrealised growth, real estate investors and those investing in start-ups (under specific conditions) will be subject to a vermogenswinstbelasting (capital gains tax), meaning they are only taxed when the profit is actually realised upon sale [1][9]. This discrepancy has fuelled public discontent, with critics noting that the new system is more beneficial for real estate owners, who can also deduct expenses from their taxable profit, unlike share traders [1]. On online forums, investors have calculated that a fictitious return of 6% on €200,000 in the S&P 500 would result in a tax liability of €4,320 under the old rules, whereas the new system’s 36% tax on actual volatile spikes could result in unmanageable yearly fluctuations [8].

Complexity and Future Outlook

Despite the intention to make the system fairer, the Council of State has warned that the new capital gains tax plan is “much more complex” than the current regime, raising concerns about execution and enforcement [4]. During the debate, over 130 detailed questions were posed to the State Secretary, and 23 motions were introduced to create exceptions, leading to fears that the exceptions might eventually become the rule [2][6]. For the digital sector and legacy industries attempting to digitalise, the “lock-in effect” of the tax structure remains a critical hurdle, with industry voices advocating for higher consumption taxes, such as on aviation or petrol, as a less damaging alternative to plug the short-term budget deficit [6].

Sources & Ecosystem Partners

Capital Gains Tax Reform