Defusing the Box 3 Bombshells: What the New Dutch Tax Really Means

Please note that Black Swan Capital BV does not provide tax or accounting services and this article should not be considered as tax advice in any way.

Headlines talk of “Insane new tax” “Punishing investors” and “Confiscation” of assets following the approval of a new Dutch tax format based on unrealised gains in investments.

Journalists and online commentators discuss how investors could lose more money than they started with and how outrageous tax bills could crash the markets.

Some guy that your colleague knows said that there’s no point in owning anything now if you live in the Netherlands and a life of crime might be the only solution.

Yes, the new Dutch investment tax system, approved in early 2026 and which comes into force in 2028, is different to the old one. Yes, it is different from the capital gains taxes in the US, UK, Germany and many other countries. Yes, it is confusing if you only look at the alarmist headlines.

But no, it is not going to make investing pointless, will not wipe out more than 100% of your returns and won’t crash the markets every year. Let’s have a look at the reality of the new system, what it means to investors and why it will not be the unmitigated disaster that some scaremongers are predicting.

Real risks, terrible taxes or planning priorities?

Let’s look first at the most contentious part of the new Box 3 regime: ‘Unrealised’ gains.

Most of the outrage about the new tax has been focused on the fact that tax bills for investors resident in the Netherlands from 2028 will be based on the value of the assets at the end of the year, whether they have been sold or not. Detractors say that this charges a tax on money that the taxpayer does not have. This is a misunderstanding at best, but fear-mongering and disingenuous in many cases. The fact that someone is holding a ‘paper’ asset like stocks or cryptocurrencies, rather than having that value in cash does not mean that it does not exist. In reality, the more rational objection to taxing the growth in value of owned assets, rather than the profit made when selling them, is that you might need to sell something in order to cover the tax bill. This creates an inherent ‘liquidity risk’ which was specifically addressed in the legislation. Where the value of an asset cannot be easily converted to cash (such as real estate or qualifying startup companies) there are exceptions in place to prevent negative overall positions.

If the asset has an active market and is semi-liquid (easily converted to cash) then it is the responsibility of the investor (with the help of their accountant and financial advisor) to ensure that they have enough liquidity (ready cash) to pay the tax bill. I have seen some commentators speculating that someone who has a large unrealised gain at the end of the year and then falls victim to a market crash in the following weeks/months before the taxman comes-a-knocking might end up with a bill for a gain that no longer exists, but that just indicates a lack of forward-thinking management. If you are expecting a significant expense, you should not be exposing that money to undue risk.

Keeping an expected tax liability in volatile investment assets is no different to taking next month’s rent or mortgage repayment money to the casino. You might be lucky, but it’s better to be prepared. The crypto investor community has been particularly vocal about the risk of being taxed on assets that are still invested, but that is the nature of highly volatile, unproductive assets. They are high risk, with the potential for high reward.

There is one massive, unexpected advantage that has been largely overlooked in the criticism of the new Box 3 tax regulations, namely the indefinite rollover of capital losses over €500. This one potentially blows the “pay more in tax than you even started with” claims out of the water. Many tax systems put a limit on the number of years that you can retain an investment loss as a deductible against future gains. The new Dutch tax says that if you make a loss in one year, it rolls over forever until you make more than you started with. This essentially creates a high-water-mark for investors, protecting them from market downturns without the need to ‘crystallise’ these numbers by selling at a loss. For example, if an investment starts at €100,000 and drops to €50,000 in a particularly bad crash, there should be no tax to pay at all until it recovers to above the initial 100k starting value. If an account grows from €1m to €2m, then yes, there will be a big chunk of change to pay in that year, but you will not be taxed again if it doesn’t grow after that. The new regulations do not give the Belastingdienst carte blanche to penalise the same money over and over again.

The indefinite loss carry-forward effectively prevents taxation on recovery rather than growth.

These calculations may be unfamiliar and possibly unwelcome to investors who are used to tax being payable only when the winnings have landed in their pocket, but different does not mean dangerous. Different countries have different systems of tax assessment and payment, with varying complexity and positive or negative implications. I am quite sure that this new system will be shortly followed by a raft of tax-deferred investment opportunities and tax-advantaged structures to encourage long-term investment.

Even if every investor is forced to sell enough of their gains on January 1st to prepare for the tax bill a few months later, this still leaves the principal and most of the profit intact for an investor who was up at the end of the year. The first €1,800 of growth will be exempt, and everything above that can be budgeted for projected taxation.

There are very real extra costs that may arise from the new Box 3 assessment, from the difficulty of valuing certain volatile assets, to the additional administration required across multiple accounts and the interaction between different systems for cross-border investors, but these are nothing new for anyone who has lived and worked in multiple jurisdictions.

It’s worth remembering that these changes to the tax system for investors in the Netherlands came about because of objections to the old system, which was deemed to favour high-growth investors and penalise everyday savers or those who made zero or negative returns. Many have claimed that the new regulations unfairly penalise those who make big returns and incentivise hoarding cash. There will never be a tax system that is loved by all and universally deemed to be fair, so make sure you speak with your financial advisor and accountant to understand how to optimise your own position within the framework you are given and work towards your objectives.

Different countries have different rules. Tax systems change. Behaviour adapts. Investing continues.