Netherlands Parliament Approves Annual Tax on Unrealized Bitcoin and Asset Gains

Source: CryptoNewsNet Original Title: Netherlands Plans Annual Tax on Unrealized Bitcoin Gains Original Link:

Overview

The Netherlands is moving toward taxing unrealized capital gains on Bitcoin, stocks, bonds, and other assets. Parliament has backed a major overhaul of annual income tax filings that would require investors to pay tax each year based on asset value changes, even when no sale occurs. Lawmakers framed the move as a response to court rulings that rejected the current system, which relied on assumed or fictitious returns.

The Reform Framework

The reform, known as Wet werkelijk rendement Box 3, is scheduled to take effect in 2028. It will tax actual returns by measuring the difference between an asset’s value at the start and end of each year, plus any income received. As a result, both realized and unrealized gains will fall under taxation, according to parliamentary documents.

The proposal has sparked intense debate across political parties. Critics warn that the system could force investors to pay taxes on paper gains without cashing out. Supporters argue that delay would deepen fiscal losses already estimated at billions of euros annually.

Parliamentary Decision Despite Reservations

The Tweede Kamer, the lower house of the Dutch parliament, debated the proposal extensively. Lawmakers posed more than 130 questions to caretaker State Secretary for Taxation Eugène Heijnen, reflecting broad unease.

Despite strong criticism, a consensus emerged that postponing reform remains too costly. Parliamentarians cited treasury losses of about €2.3 billion per year if the system stays unchanged. As a result, several parties signalled reluctant support to avoid further fiscal damage.

VVD, CDA, JA21, BBB, and PVV confirmed backing, while D66 and GroenLinks-PvdA also pledged support. GroenLinks-PvdA MP Luc Stultiens said taxing unrealized profits avoids “billions in budget losses” and remains easier to implement.

Key Concerns: Liquidity and Complexity

The most contested issue involves annual taxation on assets that investors have not sold. Under the new framework, holders of stocks, bonds, or cryptocurrencies would owe tax on yearly gains regardless of liquidity.

Heijnen told lawmakers that the caretaker government initially preferred taxing gains only once investors receive payouts. Still, he said, implementation by 2028 makes that approach unworkable. He added that further delays would strain public finances beyond what the government can absorb.

Complexity remains a concern. ChristenUnie MP Pieter Grinwis warned during the debate that the new framework may rival or exceed the current system’s complexity, noting that “every year we say it should be simpler.”

Real Estate Treatment

While financial asset holders face annual taxation, real estate investors will see different rules. Under the new Box 3 system, property owners can deduct expenses from taxable profit. They will also pay tax only when profits materialise, rather than yearly on value changes.

The reform includes an extra levy on personal use of a second home. Lawmakers said the change corrects distortions in the current system, which limited deductions and applied assumed returns regardless of real costs or income.

Looking Ahead

As lawmakers move forward despite doubts, the key question remains: can a tax system that targets unrealized gains balance fairness, feasibility, and fiscal urgency without burdening investors unevenly?