Netherlands Proposes Capital-Growth Tax on Crypto Holdings

The Netherlands is considering a major overhaul of its wealth-tax system, which would include annual cryptocurrency gains in taxable income from January 1, 2028. The proposal aims to replace the current Box 3 system, which uses assumed returns rather than each taxpayer's actual performance.

The new capital-growth tax mechanism would generally include annual changes in the value of liquid assets in taxable Box 3 income. This means that Dutch residents holding Bitcoin (BTC) or other cryptocurrencies could see an increase in their taxable income even if they haven't sold their assets. A decline in value could also produce a negative return, with losses eligible to be carried forward.

The proposed rate for the capital-growth tax is 36%, which would apply to taxable Box 3 income. However, deductions and loss rules would also apply, so the rate may not automatically apply to every dollar of an asset's gross annual increase. The government has targeted 2028 to allow tax authorities and financial institutions time to prepare their systems.