The Dutch parliament has approved a new tax on unrealized capital gains that will take effect on 1 January 2028. Unlike traditional taxes on income, dividends or rent, this levy applies to the increase in value of assets such as stocks, bonds or cryptocurrencies even if the owner never sells them.
How the tax works
- Scope – Applies to assets classified in “box 3” of the Dutch tax system (investment assets). Real‑estate and shares in privately held companies are taxed only when realized, not under this rule.
- Rate – A flat 36 % tax on the annual unrealized appreciation of the assets.
- Exemption – The first €1 800 of gains per year is tax‑free.
- Losses – Unlimited loss carry‑forward is allowed, but only after the first €500 of losses.
- Business assets – Certain assets used in a business are exempt.
- Implementation timeline – The law has passed the House of Representatives; the Senate is expected to approve it. Full enactment is slated for 1 January 2028.
Why the change was introduced
The previous “assumed return” system estimated a fictional rate of return on assets and taxed that amount. After the Dutch Supreme Court declared the method unconstitutional in 2021, the government switched to taxing actual (but unrealized) gains. The shift is intended to recover an estimated €2.3 billion in annual revenue that was lost when taxpayers could report lower, actual returns.
Immediate implications for Dutch residents
- Tax liability will arise each year regardless of whether the assets are sold.
- A market decline does not reverse taxes already paid on earlier gains.
- Asset‑rich, cash‑poor individuals (e.g., those whose wealth is tied up in shares) may face liquidity challenges to meet the tax bill.
Options for Dutch citizens
1. Become a tax non‑resident
- Deregister from Dutch municipal records and sever ties that create tax residency (e.g., primary home, employment, social security).
- Secure a residence permit and tax residency in another jurisdiction before the 2028 deadline.
2. Relocate within the European Union
Countries that currently do not levy unrealized capital gains taxes and offer favorable tax regimes include:
| Country | Key features |
|---|---|
| Ireland | 5‑year residency leads to citizenship; non‑dom regime can limit income tax on foreign earnings. |
| Malta | Offers citizenship‑by‑investment and a non‑dom system that exempts foreign‑sourced gains. |
| Cyprus | Potential naturalisation in as little as 3 years for qualifying applicants; also provides a non‑dom tax framework. |
These jurisdictions allow continued EU freedom of movement while avoiding the Dutch unrealized gains tax.
3. Move outside the EU
- Latin America – Nations such as Costa Rica, Panama, Paraguay and Chile have relatively low personal‑income tax rates and pathways to residency or citizenship that can be completed in 3–5 years.
- Southeast Asia – Thailand and Malaysia offer residence options with tax structures similar to Ireland’s non‑dom regime, though they do not provide EU passports.
- Gulf states – The UAE, Oman and Saudi Arabia are tax‑friendly but lack direct routes to citizenship.
Practical steps to consider
- Assess your asset profile – Determine the size of your unrealized gains and potential tax liability under the 36 % rate.
- Consult a tax professional – Local expertise is essential to navigate deregistration, exit taxes (if any) and the tax rules of the destination country.
- Plan residency – Obtain a residence permit in the chosen jurisdiction well before the 2028 deadline; simply “traveling” does not change tax residency.
- Consider dual citizenship – If your current Dutch law does not permit dual nationality, you may need to acquire a second passport (e.g., via investment programs) before relinquishing Dutch citizenship.
- Monitor legislative developments – While other European nations have not yet introduced unrealized gains taxes, the Netherlands could set a precedent that spreads to France, Spain or other high‑tax states.
Risks and caveats
- Liquidity risk – Paying tax on paper gains may require liquidating assets or borrowing against them.
- Future tax policy – Even after relocating, other countries could adopt similar taxes, especially if the Dutch model proves financially effective.
- Citizenship restrictions – Some countries (including the Netherlands) limit dual citizenship, potentially complicating a clean exit from the tax system.
- Exit taxes – Depending on your domicile and the assets involved, you may face additional exit taxes when changing residency.
By evaluating the financial impact, securing professional advice, and establishing a new tax residency before the 2028 implementation date, Dutch citizens can mitigate the burden of the upcoming unrealized capital gains tax.
