Dutch Government Retreats on Controversial Asset Tax After Royal Intervention
The Hague, Thursday, 26 February 2026.
The Netherlands government is pulling back its planned 2028 asset tax reform following fierce criticism, including from Prince Constantijn who warned the policy would damage the startup ecosystem. The controversial Box 3 tax would have forced investors to pay annual taxes on unrealized gains from stocks and cryptocurrencies - essentially taxing money they haven’t actually earned yet. Finance Minister Heinen confirmed the law needs amendments after startup advocates argued employees paid in equity shares would face crippling tax bills without cash to pay them, potentially driving tech talent and investment away from the Netherlands.
Government Confirms Policy Reversal
The Dutch Cabinet’s retreat represents a significant policy reversal just weeks after the Tweede Kamer approved the controversial legislation. On Wednesday, February 25, 2026, a spokesperson for Finance Minister Eelco Heinen confirmed to NOS that the government would amend the Box 3 reform bill before it reaches the Senate [1]. “There is a lot of criticism of the Actual Return Act. We are not deaf to that,” the spokesperson stated, acknowledging that “the bill needs to be amended” [1]. This development follows the lower house’s recent approval of the tax reform, which had been scheduled to take effect in 2028 [1]. The previous article on this topic detailed how the original proposal would have created unprecedented tax burdens for startup employees holding equity compensation (https://inspirega.bytes.news/96dd793-startup-taxation-equity-compensation/) [GPT].
Royal Criticism Highlights Startup Concerns
Prince Constantijn of Orange emerged as a prominent critic of the tax reform, leveraging his position as special envoy for Techleap to highlight the policy’s potential damage to the Netherlands’ startup ecosystem [1][2][3]. Speaking on WNL op Zondag on February 22, 2026, the Prince warned that the new regime “sends the wrong signal abroad” and undermines the business climate precisely when the government claims to support innovation [3]. “The message is: Don’t come, the Netherlands isn’t open for business,” he stated, expressing particular concern about the impact on startups that typically compensate employees through equity rather than high salaries [3]. His intervention proved influential, with the Prince arguing that the policy would make the Netherlands less attractive to international investors and talent at a time when countries actively compete to attract innovative companies [2].
Inadequate Exemptions Expose Startup Vulnerabilities
While the original legislation included exceptions for startup shares, industry advocates argued these protections were insufficient to address the sector’s unique compensation structures [1]. Under the proposed framework, startup shares would only be taxed upon sale rather than on annual value increases, but the criteria for this exemption proved restrictively narrow [1]. The exemption would have applied only to companies under five years old with annual turnover below €30 million, leaving many scale-ups and their employees exposed to the unrealized gains tax [5]. More problematically, the exemption excluded shareholdings below five percent, potentially affecting numerous minority investors and employees with smaller equity stakes [3]. This gap in coverage particularly concerned startup advocates, as many employees receive equity compensation packages that would fall below this threshold.
Economic Pressures Drive Policy Reconsideration
The government’s decision to reconsider the Box 3 reform comes amid mounting financial pressure from the current system’s legal vulnerabilities. Multiple court rulings have declared the existing Box 3 tax system unlawful, forcing the Tax Authority to operate under a costly interim arrangement [1]. Under this temporary system, asset holders are taxed on a fictitious return, with refunds available if actual returns prove lower [1]. This arrangement costs the Dutch treasury approximately €2.3 billion annually, creating significant fiscal pressure that initially drove the push for reform [1]. However, criticism from high-profile figures including Elon Musk, who endorsed social media posts calling the Dutch plan “crazy,” added international attention to the domestic policy debate [1]. The combination of fiscal necessity and reputational concerns has left the government seeking a middle path that addresses legal requirements without damaging the business climate.