The Dutch government has announced a major revision to its proposed tax overhaul that would have imposed a 36% levy on unrealized gains from cryptocurrencies, stocks, and other investments. Finance Minister Eelco Heinen stated the current legislation "cannot proceed as it is" and that "something simply went wrong," signaling a pause in the controversial plan.
The proposed system, known as the Actual Return in Box 3 Act, was scheduled to take effect on January 1, 2028. It aimed to tax investors based on the annual change in value of their assets, even if those assets were not sold. This approach drew fierce criticism from lawmakers, local investors, and the crypto community, who argued it would stifle innovation, encourage capital flight, and unfairly tax paper gains.
Minister Heinen revealed there is still time to amend the bill before its 2028 enactment. He has committed to returning to the drawing board with the House of Representatives and the Senate to find a suitable revision. He even opened the door to a complete rewrite of the crypto tax provisions if targeted amendments prove insufficient.
The backlash was fueled by reports of a potential exodus of wealthy individuals and innovators from the Netherlands. Critics, including the non-profit Tax Foundation, warned that wealth taxes disincentivize entrepreneurship, reduce wages, destroy jobs, and ultimately make all income groups worse off due to decreased economic activity. The Netherlands' existing capital gains tax of 36% is already significantly higher than the OECD average.
This legislative reversal comes after the Dutch House of Representatives passed the bill two weeks ago, sending it to the Senate for final consideration. The Senate, which had yet to formally discuss the plan, was reported to share the public's concerns. The proposed tax was developed to replace the old Box 3 system, which taxed assumed returns and was ruled unfair and unsustainable by the Supreme Court, costing the state hundreds of millions annually in delayed repayments.
