Netherlands Abandons Annual Tax on Investment Gains Before Sale
The Hague, Friday, 30 January 2026.
The Dutch coalition government will eliminate the controversial annual wealth tax on unrealized investment gains, allowing investors to pay taxes only when they actually sell assets for profit. This major policy reversal addresses business lobby demands and could significantly benefit startup founders and long-term investors who previously faced yearly tax bills on paper gains they hadn’t realized.
Coalition Agreement Signals Major Tax Reform
On January 30, 2026, the new Dutch coalition government comprising D66, VVD, and CDA formally announced their intention to overhaul the Box 3 wealth tax system through their coalition agreement titled ‘Aan de slag – Bouwen aan een beter Nederland’ [1][2]. Under the proposed changes, the tax on unrealized gains from investments such as shares would be eliminated, with investors only paying tax when they actually sell their assets at a profit [1][2]. This represents a fundamental departure from the current system and addresses what the coalition describes as promoting long-term investment strategies [1][2].
Business Lobby Victory After Years of Pressure
The proposed reform directly responds to sustained pressure from VNO-NCW, the Netherlands’ largest business lobby group, which has long advocated for changes to encourage long-term investments [1][2]. The coalition explicitly acknowledges this influence, stating that the ‘doorontwikkeling’ (further development) of the Box 3 system addresses demands from the business community [2]. This marks a significant victory for corporate interests that have consistently argued the annual taxation of unrealized gains creates perverse incentives for short-term investment behavior.
Current System Faces Legal and Practical Challenges
The existing Box 3 system, which taxes wealthy individuals based on assumed returns rather than actual gains, has faced mounting legal challenges [1][2]. A series of court rulings against the state have demonstrated that the current approach is no longer legally viable [1][2]. Under the system scheduled to take effect in 2028, taxpayers would face annual taxation on capital gains, including unrealized ‘paper’ profits, with only real estate and startup shares currently exempted [1]. The complexity and legal vulnerabilities of this intermediate system have created pressure for the more comprehensive reform now proposed by the coalition.
Timeline Pressures and Financial Stakes
The Tweede Kamer must approve the existing 2028 rollout bill by mid-March 2026 to proceed as scheduled [1]. Despite widespread criticism of the current proposals, many parliamentary parties acknowledge that designing alternatives would consume too much time, with each year of delay costing the state hundreds of millions of euros [1][2]. This creates a complex political dynamic where the coalition’s new approach may need to navigate the immediate timeline pressures of the 2028 implementation while developing their preferred capital gains tax system. The financial stakes are substantial, with initial estimates suggesting that a full capital gains tax for real estate alone could have budgetary implications of approximately €23 billion in the first ten years, rising to €42 billion over thirty years [3].
Implications for Investors and Market Behavior
The policy shift could fundamentally alter investment behavior in the Netherlands, particularly benefiting startup founders and equity holders who previously faced annual tax obligations on unrealized value increases [GPT]. Experts have warned that the current system of taxing unrealized gains annually could encourage capital flight from the Netherlands, as investors and wealthy individuals seek jurisdictions with more favorable tax treatment [4]. The coalition’s proposed changes would align Dutch policy more closely with traditional capital gains tax systems used in many other developed economies, where taxation occurs only upon the realization of actual profits through asset sales [GPT].