The Dutch House of Representatives has approved the Actual Return in Box 3 Act, a sweeping reform that will impose a 36% flat tax on actual investment returns beginning January 1, 2028. This legislation transitions the Netherlands toward a mark-to-market system, where residents must pay taxes on paper profits from cryptocurrencies, stocks, and bonds even if the assets remain unsold. Pending Senate approval, the move signals a definitive end to the previous framework of taxing assumed returns.
The legislative shift addresses a series of Dutch Supreme Court rulings that found the older system violated European human rights protections. By taxing unrealized gains, the government aims to recover an estimated €2.3 billion in annual lost revenue. While real estate and qualifying startup shares will still be taxed only upon sale, most liquid assets will face annual assessment based on their year-over-year value increase.
Regional Fiscal Competition
The Netherlands already maintains a high statutory personal income tax rate, with top brackets reaching 49.50% in 2026. This aggressive stance on unrealized gains distinguishes the country from European neighbors like Germany and Norway, which generally tax capital gains only at the point of realization. Analysts suggest this discrepancy could impact the long-term competitive standing of the Dutch financial sector.
The average top personal income tax rate across OECD European nations currently sits at 43.4%. By implementing an annual 36% levy on asset appreciation, Dutch lawmakers are venturing into territory that critics warn could trigger capital flight. High-net-worth individuals and crypto-asset holders may evaluate relocating to jurisdictions with more traditional realization-based regimes to avoid annual mark-to-market liabilities.
Liquidity and Market Sentiment
The inclusion of digital assets reflects the growing institutional footprint of the crypto market in the Netherlands. By late 2025, indirect crypto investments held by Dutch entities reached €1.2 billion, a significant rise from previous years. However, taxing these volatile assets before they are liquidated presents unique challenges for retail investors who may lack immediate cash flow.
Market observers have highlighted the potential for liquidity traps, where investors are forced to sell portions of their portfolios simply to cover the tax bill on paper gains. To mitigate this, the bill includes a €1,800 tax-free return threshold and provisions for carrying forward net losses exceeding €500 indefinitely. Despite these safeguards, the requirement to settle liabilities on uncashed profits remains a point of friction for the broader investment community.
The bill’s review period has been shortened from five years to three to allow for rapid adjustments if the rollout encounters structural problems. While several political parties expressed reservations about taxing unrealized gains, the need for a legally viable framework outweighed these concerns. The final implementation now rests on the upcoming Senate vote.