Netherlands Plans Annual Tax on Unrealized Bitcoin Gains

Source: CryptoTale Original Title: Netherlands Plans Annual Tax on Unrealized Bitcoin Gains Original Link: The Netherlands is moving toward taxing unrealized capital gains on Bitcoin, stocks, bonds, and other assets, and parliament backed a major overhaul of annual income tax filings. The proposal would require investors to pay tax each year based on asset value changes, even when no sale occurs. Lawmakers framed the move as a response to court rulings that rejected the current system, which relied on assumed or fictitious returns.

The reform, known as Wet werkelijk rendement Box 3, is scheduled to take effect in 2028. It will tax actual returns by measuring the difference between an asset’s value at the start and end of each year, plus any income received. As a result, both realized and unrealized gains will fall under taxation, according to parliamentary documents.

Parliament Pushes Ahead Despite Deep Reservations

According to reports, a majority of parliamentarians stand ready to approve changes to annual income tax filings that include taxes on both realized and unrealized capital gains. The proposal forms part of a broader effort to reform the Box 3 asset tax after court rulings found the government acted unlawfully by taxing fictitious returns.

The Tweede Kamer, the lower house of the Dutch parliament, debated the proposal extensively. Lawmakers posed more than 130 questions to caretaker State Secretary for Taxation Eugène Heijnen, reflecting broad unease.

Despite strong criticism, a consensus emerged that postponing reform remains too costly. Parliamentarians cited treasury losses of about €2.3 billion per year if the system stays unchanged. As a result, several parties signalled reluctant support to avoid further fiscal damage.

Liquidity Fears Dominate Investor Concerns

The most contested issue involves annual taxation on assets that investors have not sold. Under the new framework, holders of stocks, bonds, or cryptocurrencies would owe tax on yearly gains regardless of liquidity. Most parties in the Tweede Kamer consider this outcome undesirable.

Heijnen told lawmakers that the caretaker government initially preferred taxing gains only once investors receive payouts. Still, he said, implementation by 2028 makes that approach unworkable. He added that further delays would strain public finances beyond what the government can absorb.

These arguments persuaded several parties to support the bill despite concerns. VVD, CDA, JA21, BBB, and PVV confirmed backing. D66 and GroenLinks-PvdA also pledged support. GroenLinks-PvdA MP Luc Stultiens said taxing unrealized profits avoids “billions in budget losses” and remains easier to implement.

Real Estate Gets Different Treatment Under Box 3

While financial asset holders face annual taxation, real estate investors will see different rules. Under the new Box 3 system, property owners can deduct expenses from taxable profit. They will also pay tax only when profits materialise, rather than yearly on value changes.

The reform includes an extra levy on personal use of a second home. Lawmakers said the change corrects distortions in the current system, which limited deductions and applied assumed returns regardless of real costs or income.

Complexity remains a concern. ChristenUnie MP Pieter Grinwis warned during the debate that the new framework may rival or exceed the current system’s complexity. “Every year we say it should be simpler,” he said. “Are we really going to inflict this on our country?”

As lawmakers move forward despite doubts, one question persists: can a tax system that targets unrealized gains balance fairness, feasibility, and fiscal urgency without burdening investors unevenly?