The cabinet has proposed a major overhaul of its “box 3” asset tax system in the Netherlands, after years of fierce debate and legal wrangling.
The new system is part of a package of concessions made to opposition parties during budget negotiations, alongside scrapping billions in planned cuts to social security.
The Supreme Court ruled in 2021 that the income tax raised on assets and savings, designated as box 3 on the tax return form, conflicted with European human rights law because it was based on a fictional rate of return. In years when stock markets made a loss, investors were still taxed as if they had made a profit.
It also assumed everyone held the same mix of savings and investments, regardless of what they actually owned. The Supreme Court said this was unfair on people who chose to hold their money in savings accounts, which deliver much lower returns.
The government initially planned to reform the system by calculating actual capital gains on unrealised gains, such as the increased value in stocks and shares. Investors would not pay tax in years when they made a loss, but the tax would be paid on sold and unsold assets alike.
Now, the coalition proposes to move to a realised gains system – meaning you pay capital gains tax (36%) only once you sell your assets. This lets people delay paying tax until they sell, which the finance ministry estimates will cost the treasury around €15 billion up to 2035.
None of this is agreed on yet – the plans still need majority support in both houses of parliament before the end of the year and several opposition parties still have objections. The three-party centre-right cabinet has no majority in either house.
Small investors hit hardest
While many financial experts are happy that the government has reversed course on unrealised gains tax, part of the current compromise – cutting the tax-free allowance to €30,846 next year and then to €1,000 of tax-free earnings from 2028 – will hit small savers and investors the hardest.
Luke Staden, an international financial adviser and founder of Staden Financial Management, told Dutch News that while he is very glad the government is “finally trying to create a sensible taxation policy” by switching to a realised gains system, he also thinks the cut in tax-free allowance is “rather regressive and unfair.”
“I think there is much more that could be gained by looking at more progressive taxation on ultra-high net worth individuals or by increasing corporate taxes.”
While wealth taxes are gaining public support in other parts of Europe, critics say the new box 3 changes mainly hit middle-income households.
Staden said this is simply because it’s the easiest method that immediately finds extra revenue for the government. From the government’s point of view, he said, “one benefit is that all of the people this affects the hardest have the fewest means to fight against it. The government is clearly struggling at the moment and is probably trying to pick its battles.”
“The jaded cynic in me thinks that it’s probably because the ultra wealthy can use their wealth to impact politics in such a way that makes them a scary target to go after.”
“The realist in me says that given the government has essentially scrapped the last 3 years of preparation for an unrealised tax system they now have to replace, they’re panicking and this change is a quick fix that is the easiest way to generate some extra money in the short term.”
Here is what you need to know:
- Nothing changes this year. For 2026, you pay no box 3 tax on the first €59,357 you have in savings and investments, or double that if you have a tax partner.
- Next year the tax-free amount almost halves. From 2027 it drops to €30,846 per person, so many people who have never paid tax on their savings will get a bill.
- Your home and pension are not affected. The house you live in and money in a workplace pension fund are not part of box 3.
- From 2028 the system changes completely. Instead of a tax-free amount of money, you will be allowed €1,000 of tax-free earnings a year from your savings and investments. Anything you earn above that is taxed at 36%.
- Savers lose out the most. Interest is paid every year, so it is taxed every year. At 2% interest, you would start paying tax once you have more than about €50,000 in the bank.
- The higher your interest rate, the sooner you pay. At 1.25%, you could have about €80,000 before paying tax. At 3%, it would be about €33,000.
- For example, someone with €70,000 in savings earning 2% would get €1,400 in interest. They would pay tax on €400, which comes to about €144 a year.
- Investors pay more in 2027 but gain from 2028. Next year, investors face both the lower tax-free amount and a higher assumed return on their investments.
- From 2028, shares, bonds and funds will only be taxed when you sell them and make a profit, not every year as they rise in value.
- Crypto and foreign currency have to wait longer. According to Dutch media reports, crypto and savings in other currencies will only switch to being taxed on sale in 2030.
- Second homes and rental property cost more in 2027. The tax on rental income and holiday homes goes up next year.
- Business owners with their own company (bv) get a mixed deal. They pay less tax on profits they pay out to themselves for four years from 2027. But the amount they can borrow from their own company will be cut from €500,000 to €100,000, except for loans to buy their own home.
- Money held abroad counts too. If you live in the Netherlands, savings and investments in other countries are also taxed here. Foreign banks do not fill in your Dutch tax return, so you will need to keep your own records.
- You need to keep track of what you paid for investments. From 2028, banks will not be able to fill in your tax return for you in at least the first year, so you will need to work out your own profits.
