A major shift just took place in the Netherlands where the country will start taxing unrealized capital gains starting from January 1st 2028.
What makes this signifant is how this hinders the stacking of profits on crypto, stocks and bonds.
How does the new unrealized capital gains tax work?
Example 1
Year 1: You buy a stock worth 10,000€, and the stock goes to 20,000€ value.
Year 2: That stock drops back to 10,000€.
Year 3: The stock goes back to 20,000€.
In this scenario you would have to pay 36% capital gains tax on the first year’s 10,000€ unrealized profit. After the yearly €1,800 allowance, the 36% is paid on the remaining 8,200€ * 36% = 2,952€. That’s even if you did not sell any stock.
The 2nd year, when the price drops back to 10,000€, you will not pay any tax but you will receive a permanent carry-forward tax deduction for future profits worth 10,000€.
On the 3rd year you will not pay any taxes because the 1,800€ yearly allowance and the 10,000€ carry-forward. You still have a 1,800€ carry-forward left for the future.
…In this optimistic scenario you eventually made a 10,000€ unrealized profit but you had to pay 2,952€ in taxes even when you did not sell anything.
Example 2
Year 1: You buy a stock worth 10,000€, and the stock goes 20,000€ value.
Year 2: That stock doubles in value again to 40,000€.
Year 3: That stock value doubles again to 80,000€. You sold nothing.
Your taxes for each year would be the following:
Year 1: 2,952€ (from 10,000€ unrealized profit)
year 2: 6,552€ (from 20,000€ unrealized profit)
Year 3: 13,752€ (from 40,000€ unrealized profit)
Total taxes: 23,256€
In an aggressive bull market like this your unrealized profits and taxes stack up fast.
This creates a unique situation. Imagine holding a stock or cryptocurrency portfolio that appreciates substantially over a year: even if you choose not to sell and lock in those gains, you could still owe taxes on them. That means tax bills without liquidity, forcing some investors to sell assets simply to pay tax on gains they haven’t realized.
Tax Exodus
For many long-term investors, this structure feels counterintuitive. Instead of encouraging long-term holding, the system could push people toward more frequent trading or even away from holding assets subject to this tax. It also creates an incentive for investors to restructuring their assets or residency — especially if they have the flexibility to do so.
Critics have warned that this policy could fuel capital flight, with investors seeking tax-friendly jurisdictions to preserve wealth and avoid onerous annual tax liabilities on unrealized gains. Countries like Singapore, the UAE (e.g., Dubai), and Switzerland, which offer more favorable treatment of capital gains or territorial tax systems, are often cited as attractive alternatives.
What People Are Considering Instead
For people who see this coming, a few strategic options are emerging:
- Relocating residency to a jurisdiction with no unrealized gains tax. Places like the UAE or Singapore are frequently mentioned because they attract global investors and have friendly tax regimes on investment income.
- Reorganizing assets into corporate structures (like a BV), which may defer or change how gains are taxed.
- Planning an exit before the rules take effect so that future gains are realized or managed outside the Dutch Box 3 regime.
Tax Changes Is Also Why E-Residencies Are Gaining Popularity
Netherlands is not the only country considering an unrealized tax law. Most countries are looking at each other and adopting stricter policies around taxes, privacy and residency programs. Meanwhile other countries are benefiting from this trend.
An e-residency such as Palau ID, which costs just $288 a year (~243€), does not give you a tax-free card of Netherlands taxation.
However it will give you more mobility and choices, especially if you decide to relocate yourself or your assets out of the Netherlands via physical relocation or re-arranging your assets under global corporations. Palau taxes 0% on income outside of Palau for e-residents. It’s one more tool in the toolbox for people who think ahead. Check the full benefits of Palau ID here.