New coalition to overhaul Box 3 wealth tax, scrap annual levy on unrealized gains

The new coalition plans to revise the current Box 3 wealth tax system again. Under the proposed changes, the tax on unrealized gains, such as increases in the value of shares, would be scrapped, and investors would pay tax only when they sell their assets at a profit, according to the coalition agreement from D66, VVD, and CDA.

This “update” to the Box 3 system addresses a long-standing demand from VNO-NCW, the Netherlands’ largest business lobby group, which says the change will help promote long-term investments.

At present, wealthy individuals are taxed on an assumed return. A string of court rulings against the state showed this approach is no longer viable. As a result, a system taxing actual returns has been under development for years. From 2028, a tax on capital gains, including unrealized “paper” profits, will take effect, with only real estate and startup shares currently exempted.

The Tweede Kamer, the lower house of Dutch parliament, spoke to caretaker State Secretary of Finance Eugène Heijnen last week to discuss the system. This comes even though the previous Cabinet pushed ahead with Box 3 asset tax reform despite significant criticism last year. During the latest debate, however, parties currently negotiating the new coalition described those previous plans as merely an interim measure. Parties such as JA21 and BBB have stated that they favor a full capital gains tax rather than an annual tax on unrealized value increases.

For the 2028 rollout to proceed, the Tweede Kamer must approve the bill by mid-March, which seems achievable. While many parties have criticized the proposals, they acknowledge that designing alternatives would take too long, with each year of delay costing the state hundreds of millions of euros.