Netherlands risks capital flight with unrealized gains tax on stocks, crypto

The Netherlands is about to pull a wild move — taxing your paper gains before you even cash out. Stocks, bonds, crypto — all on the chopping block. Investors are already screaming about capital flight, and honestly, can you blame them?

Dutch lawmakers are pushing a revamped Box 3 tax regime that would slap annual taxes on both realized AND unrealized gains. That means you pay tax on gains you haven't even sold yet. The NL Times reports a majority in parliament is ready to back this, following court rulings that killed the old system for using assumed returns instead of actual ones.

Caretaker State Secretary for Taxation Eugène Heijnen faced over 130 questions in parliament this week. While admitting flaws, most lawmakers are leaning yes — they can't afford to lose that sweet €2.3 billion ($2.7B) per year in revenue if they delay further.

Under this proposal, equity, bond, and crypto investors get hit with annual taxes on paper gains. Heijnen told parliament taxing only realized returns would be better, but the government says it's not workable before 2028. With public finances tight, delays are off the table.

Parties across the spectrum are lining up behind this: VVD, CDA, JA21, BBB, PVV from the right, plus D66 and GroenLinks–PvdA from the left. Their argument? Taxing unrealized gains is simpler to admin and avoids budget holes.

Real estate investors catch a break though — they can deduct costs and only pay tax when they actually sell. Second homes get an extra levy for personal use, but still better than the crypto/stocks treatment.

This tax plan is getting absolutely roasted by investors and crypto OGs who warn it'll accelerate capital flight out of the Netherlands.

Prominent Dutch crypto analyst Michaël van de Poppe called the plan 'insane,' saying it'll jack up annual tax burdens and push residents to leave. 'No wonder people are leaving the country, and to be fair, it's completely right to do so,' he wrote on X.

Another user dropped this fire take: 'Taxes on unrealized gains and wealth may be this century’s Boston Tea Party, Reign of Terror, or Bolshevik moment.'

The message is clear: the Netherlands is playing with fire. Taxing paper gains could trigger an exodus of both capital and talent — and the crypto community isn't staying quiet about it.