The Dutch House of Representatives on Thursday voted to pass the Actual Return in Box 3 Act (Wet werkelijk rendement box 3), a reform that will tax residents at a flat rate of 36% on the actual returns they earn from savings and investments, effective January 1, 2028.
The bill replaces a system that taxed investment income based on assumed returns, a framework the Dutch Supreme Court ruled unconstitutional in a series of decisions beginning in December 2021.
Under the new regime, the tax applies not only to income that has actually been received, such as interest, dividends, and rent, but also to the annual increase in value of assets like stocks, bonds, and cryptocurrencies, even when those assets have not been sold.
If a Dutch resident holds a portfolio of shares that rises by €10,000 over the course of a year, the tax authority will treat that paper gain as taxable income, regardless of whether the investor has sold anything.
Real estate and shares in qualifying startups will follow different rules. For those assets, the government adopted a capital gains approach, meaning that tax on the appreciation of value is charged only when the asset is sold or otherwise disposed of. Regular income from these assets, such as rental payments or dividends, will still be taxed annually in the year it is received.
Parliament also approved an amendment shortening the law’s review period from five years to three, intended to enable faster corrections if the rollout encounters problems.
Several of the parties that voted in favor of the bill have reportedly said that taxing unrealized gains is not their preferred approach, but backed the legislation because the previous system had been struck down by the Dutch Supreme Court, leaving the government without a legally viable framework for taxing investment returns and costing the treasury “an estimated €2.3 billion per year” in lost revenue.
The bill still needs Senate approval before it becomes law.
How the Dutch Personal Income Tax System Works
The Netherlands taxes its residents on worldwide income, dividing it into three separate schedules, or “boxes,” each with its own rules and rates.Box 1 covers taxable income from employment and home ownership. For 2026, the first €38,883 of income in this bracket is taxed at 8.10% (with national insurance contributions at 27.65% within that bracket). Income between €38,883 and €78,426 is taxed at 37.56%, and anything above €78,426 is taxed at 49.50%.
Box 2 applies to income from a “substantial interest,” defined as holding at least 5% of the shares in a company. Returns here are taxed at 24.5% on the first €68,843 and 31% on anything above that threshold.
Box 3 is the schedule that has just been overhauled. It covers taxable income from savings and investments. Under the old system, the government applied a fictitious rate of return to all Box 3 assets and taxed that assumed income, regardless of what the investor actually earned. The new law replaces this system with a tax on actual returns at a flat 36% rate.
The new Box 3 system replaces the old tax-free capital threshold (€57,684 in 2025) with a tax-free annual return of €1,800. If an investor’s actual return from all Box 3 assets falls below that amount, no tax is owed.
Also, if an investor incurs a net loss in a given year, that loss can be carried forward and used to reduce taxable gains in any future year, with no time limit. Only losses exceeding €500 qualify for this treatment; amounts below €500 are written off.
Liquidity Risks
Critics of the bill, particularly within the crypto community, have pointed to a core practical issue: the system requires that investors pay tax on gains they have not received in cash. This could force people to pay taxes without sufficient liquidity.A Cointelegraph report warned that, as a result of the law, many crypto-asset holders may consider leaving the country, particularly those for whom relocating to another tax jurisdiction is a realistic option.
The bill’s explanatory memorandum acknowledges the liquidity risk directly. It was the stated reason the government chose to exempt real estate and startup shares from the annual mark-to-market approach, applying a traditional capital gains treatment to those assets instead.
The bill also includes an unlimited loss carry-forward provision, allowing investors who suffer a downturn to offset those losses against future gains, and a €1,800 tax-free return threshold that exempts small savers.
According to De Nederlandsche Bank, indirect crypto investments held by Dutch companies, institutions, and households reached €1.2 billion by October 2025, up from €81 million at the end of 2020.
The financial sector held an additional €113 million in direct crypto holdings as of the third quarter of 2025. These figures represent only a fraction of total Dutch securities holdings (0.03%).
Why the Old System Was Replaced
The reform follows a series of court rulings that found the previous Box 3 framework unlawful. In its December 2021 ruling, the Dutch Supreme Court found that the existing system violated the right to property and the prohibition on discrimination under the European Convention on Human Rights.The court held that taxing people on assumed income they never actually earned was unjustified, particularly during a period of near-zero interest rates when savers were being taxed on assumed returns that bore no resemblance to their actual earnings.
Subsequent rulings in June and December 2024 found that even the government’s interim fixes continued to breach the same protections.
With each passing year that the new system was delayed, the Dutch treasury estimated it was losing roughly €2.3 billion annually due to the provisions that allowed taxpayers to demonstrate their actual returns were lower than the assumed ones.
State Secretary for Taxation Eugène Heijnen acknowledged during parliamentary debate that the caretaker government would have preferred to tax investment returns only when they are actually realized, but said this was not feasible by 2028, as taxing unrealized gains would avoid billions in budget losses and is easier to implement.
Personal Income Taxes in Europe
The Dutch top statutory personal income tax rate of 49.50% places it in the upper tier among European nations. According to Tax Foundation data for 2026, Denmark has the highest top rate at 60.5%, followed by France at 55.4% and Austria at 55%.At the lower end, Bulgaria and Romania levy a flat rate of 10%, while Hungary’s top rate is 15%. The average statutory top personal income tax rate across OECD European countries is 43.4%.
Most European countries that tax capital gains do so only upon realization, when the asset is sold. Norway taxes capital gains at realization. Germany applies a flat 25% withholding tax on investment income, also at the point of sale.
The Dutch approach of assessing portfolios annually and taxing the change in value, whether or not any assets have been sold, appears unusual by European standards.
Several parties in the Dutch governing coalition have acknowledged this distinction, which is part of the reason the commitment to eventually transition toward a realized capital gains model remains a stated policy goal.
https://www.imidaily.com/europe/dut...ax-on-unrealized-crypto-stock-and-bond-gains/ (Archive)
