Introduction
Starting January 1, 2028, the Netherlands 🇳🇱 will introduce a 36% annual tax on unrealized capital gains. This means that Dutch investors will owe taxes on profits they have not yet realized, simply because their portfolio increased in value by December 31st of each year.
What This Means for Everyday Investors
Let that sink in… Suppose you’re a simple person who wants to invest some money. You do not need to sell anything. You do not need to receive any income. You just need to hold assets that increased in value, and the tax bill arrives regardless.
Origins of the Reform
This reform was introduced following a 2021 Dutch Supreme Court ruling that declared the previous system unconstitutional.
Consequences for Long-Term Investing
The consequences are concerning. Investors may be forced to liquidate assets every year just to pay taxes on gains that may no longer exist by the time the bill is due. This directly undermines the compounding effect that long-term passive investing relies on.
Example: Impact on Returns
Assume an 8% nominal annual return and 4.5% inflation. The real return is only about 3.3–3.5% in purchasing power terms. However, the 36% tax is applied to the full 8% nominal gain, which means 2.88% of capital is paid in tax each year. After tax, the nominal return drops to 5.12%, which translates to roughly 0.6% real return after adjusting for inflation. In practical terms, the investor keeps less than 1% of real growth—an effective tax rate of 80–82% on real gains.
Inequality in the System
This law creates structural inequality. Wealthy investors can legally restructure into a private holding company (a Dutch BV) and defer taxation indefinitely. Retail investors, who followed conventional financial advice and built diversified long-term portfolios, cannot do that easily.
Broader Market Risks
The systemic risk goes beyond the Netherlands. When thousands of investors are forced to sell the same assets simultaneously to meet tax obligations, global asset prices could be negatively affected.
Exemptions and Loopholes
The most absurd aspect of this system is who it does not apply to. Boats are fully exempt. Works of art fall into a separate category where no continuous market price can be established, and the law cannot force one. For example, a painting bought for 50,000 euros can be declared at the same value the next year or even lower, creating a deductible loss. Wealthier and sophisticated investors have multiple tools to avoid this law entirely.
Personal Reflection
I am 19 and just starting to think seriously about long-term financial planning. The fact that a government can tax the growth of your savings before you ever see that money deserves far more public discussion than it is currently receiving.