The global implications of the Netherlands’ 36% unrealised gains tax.

Unrealised gains tax: The Dutch crypto policy that could reshape global investing

Unrealised gains tax is a policy that taxes investors on increases in asset value before those assets are sold, and the Netherlands’ new 36% rule marks the most aggressive modern implementation of this concept. Beginning in 2028, Dutch investors will face annual tax bills based on the rising value of assets such as Bitcoin, stocks, and ETFs, even if no sale occurs and no cash profit is realised. The policy was introduced after a court ruling forced the Dutch government to redesign its investment tax system, leaving lawmakers searching for a rapid replacement that could close a multibillion-euro revenue gap.

The change has triggered widespread debate across the global cryptocurrency industry. Critics argue that taxing paper gains creates liquidity risks, forcing investors to sell assets merely to pay tax obligations. Supporters claim it improves fairness by taxing wealth accumulation more accurately. The debate carries global implications because governments struggling with record public debt are increasingly exploring new forms of taxation on investment wealth.

This article explains how the Dutch unrealised gains tax works, why it was introduced, how it compares with global tax systems, and what investors can do to protect themselves from paying taxes on income that has not yet been realised.

Key Takeaways

The Netherlands will introduce a 36% unrealised gains tax on crypto and other liquid investments starting in 2028.
Investors may owe taxes on annual portfolio growth even if they never sell their assets.
The policy could trigger forced selling during tax season, increasing volatility in crypto markets.
Real estate and certain startup shares are exempt, creating a controversial asset-class disparity.
Investors are exploring relocation, portfolio restructuring, and long-term tax planning to reduce exposure to unrealised gains taxation.

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Understanding unrealised gains tax

An unrealised gain occurs when the value of an investment rises but the investor has not yet sold the asset. For example, if an investor buys Bitcoin for US$20,000 and its price later increases to US$100,000, the investor has an unrealised gain of US$80,000. Under traditional tax systems in most countries, tax is only triggered when the investor sells the asset and converts the gain into cash.

The Dutch policy changes this principle by applying what economists call a “mark-to-market” approach. Each year the tax authority measures the value of an investor’s assets on January 1 and again on December 31. If the value has increased, the difference is treated as taxable income.

Under the law passed in February 2026, Dutch residents will pay a flat 36 percent tax on annual gains from investments held in the country’s “Box 3” tax category. This category includes savings, securities, and cryptocurrency holdings.

For crypto investors, the consequences are significant. Bitcoin, Ethereum, and other digital assets will be assessed annually even if they remain in cold storage or long-term holdings.

If the value rises, tax must be paid whether or not the investor sells the asset.

Why the Netherlands introduced the policy

The introduction of the unrealised gains tax did not occur in isolation. It was the result of a legal crisis within the Dutch tax system.

For years the Netherlands used a system that taxed investment income based on assumed returns rather than actual earnings. Authorities calculated a hypothetical rate of return and taxed investors on that figure regardless of their real profits.

In 2021, the Dutch Supreme Court ruled that this system violated property rights under the European Convention on Human Rights. Taxing individuals on income they never actually received was deemed unlawful.

The ruling forced the government to redesign the entire investment tax framework. Without a replacement system, the Dutch treasury faced a growing annual revenue gap estimated at approximately €2.3 billion.

Lawmakers therefore introduced the “Actual Return in Box 3 Act”, which taxes real investment performance rather than hypothetical returns. However, in order to capture all gains within the tax base, the legislation included unrealised capital appreciation.

The law passed the Dutch House of Representatives with 93 votes in favour and will take effect on 1 January 2028.

What assets are affected

The new system does not treat all assets equally.

Financial investments such as stocks, bonds, mutual funds, exchange-traded funds, and cryptocurrencies fall directly within the mark-to-market regime. Their value is assessed annually and the appreciation is taxed.

However, real estate and certain startup investments remain under a traditional capital gains system. These assets are taxed only when they are sold.

This difference has already sparked criticism from economists and crypto advocates. The exemption for property assets means a rental building can appreciate significantly without triggering immediate taxation, while a digital asset like Bitcoin could generate a tax bill even when the investor receives no cash income.

Supporters of the exemption argue that illiquid assets create serious liquidity challenges. A property owner cannot easily sell a fraction of a building to pay a tax bill. Critics counter that cryptocurrency investors face the same problem if their holdings must be sold simply to pay tax.

The liquidity risk problem

The most controversial aspect of unrealised gains tax is the liquidity challenge it creates for investors.

Consider an example frequently cited by financial analysts. An investor purchases Bitcoin for US$20,000 and holds it for several years. During a strong bull market the price climbs to US$100,000. The investor has not sold the asset because they believe in its long-term potential.

Under the Dutch system the US$80,000 gain becomes taxable even though the investor has not realised the profit.

At a 36 percent rate, the tax bill would reach approximately US$28,800.

If the investor does not have spare cash available, they may be forced to sell a portion of their Bitcoin simply to cover the tax obligation. That sale itself could reduce their investment position and potentially trigger further taxes in subsequent years.

When multiplied across thousands or millions of investors, analysts warn this dynamic could trigger widespread selling during tax season.

In financial markets this scenario is sometimes described as a liquidity spiral. Investors sell assets to pay taxes, the selling pressure pushes prices down, and falling prices create further instability.

Cryptocurrency volatility and tax risk

Cryptocurrency markets add an additional complication to unrealised gains taxation because of their extreme volatility.

Bitcoin has historically experienced drawdowns of more than 70 percent between market cycles. If tax is calculated at the peak of a market rally but the price later collapses, investors may face tax bills larger than their current portfolio value.

For example, imagine Bitcoin rises to US$150,000 on December 31 of a tax year. The unrealised gain is assessed at that value, and the investor owes tax accordingly.

If the market later corrects and Bitcoin falls to US$60,000, the investor still owes tax on the earlier valuation. The asset’s value may have fallen dramatically, but the tax liability remains.

While losses can often be carried forward to offset future gains, that mechanism does not eliminate the immediate cash requirement for the tax payment.

For investors heavily concentrated in crypto assets, this situation can create financial strain.

How the Netherlands compares with other countries

The Dutch policy stands out because most countries tax capital gains only when assets are sold.

Across Europe the dominant model remains realisation-based taxation. Germany applies a flat 25 percent tax on capital gains when securities are sold. Norway taxes investment profits upon realisation. France and Austria follow similar frameworks.

Eastern European countries often maintain even lower tax rates. Bulgaria and Romania levy a flat 10 percent rate on investment income, while Hungary’s top rate sits around 15 percent.

The Netherlands therefore becomes one of the first major economies to introduce a full mark-to-market taxation system for individuals.

The concept is not entirely new, however. Economists have debated unrealised gains taxation for decades, especially as governments search for ways to tax wealth accumulation.

In the United States, proposals have occasionally surfaced to tax unrealised gains among ultra-wealthy individuals. A notable example was the proposal within the 2025 federal budget to impose a minimum tax on unrealised gains for individuals with wealth exceeding US$100 million.

Although the proposal did not pass, the policy debate demonstrated growing political interest in such taxation.

The wider context of global debt

The emergence of unrealised gains tax proposals must be viewed against the backdrop of rising global public debt.

By late 2025 global debt levels had approached US$346 trillion according to international financial estimates. Governments facing mounting fiscal pressure are increasingly searching for new tax bases that can generate revenue without raising traditional income taxes.

Investment wealth has become a focal point of this search. Digital assets in particular represent a rapidly expanding pool of capital that many governments believe remains under-taxed.

The Netherlands’ decision to tax unrealised gains therefore carries symbolic significance beyond its borders. If the policy successfully raises revenue without causing severe economic disruption, other governments may consider similar measures.

For the cryptocurrency industry, that possibility has sparked intense debate about the future of long-term investment strategies.

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Lessons from historical wealth taxes

History offers mixed lessons about aggressive taxation of wealth and investment income.

During the 1970s the United Kingdom implemented extremely high tax rates on investment income, in some cases reaching 98 percent. The policy triggered a wave of capital flight as wealthy individuals relocated to more favourable jurisdictions.

Sweden once maintained a wealth tax that applied annually to accumulated assets. The policy ultimately contributed to the departure of several prominent entrepreneurs, including the founder of IKEA. Sweden abolished the tax in 2007 after determining that the economic costs outweighed the revenue benefits.

France experienced a similar outcome with its wealth tax known as the Impôt de solidarité sur la fortune. The tax prompted thousands of high-net-worth individuals to move abroad and was eventually replaced in 2017.

These historical examples illustrate an important principle in international economics. Capital is highly mobile. When tax policies become too burdensome, investors often relocate their assets or themselves to more favourable jurisdictions.

Possible investor responses

The introduction of unrealised gains taxation is likely to influence investor behaviour in several ways.

One response already visible in the cryptocurrency community is geographic relocation. Some investors are exploring residency in jurisdictions with more favourable tax policies.

Countries frequently mentioned in this context include the United Arab Emirates, which has no personal income tax or capital gains tax. Singapore and certain Caribbean jurisdictions have also developed reputations as crypto-friendly environments.

Another strategy involves diversifying investment portfolios into asset classes treated differently under tax law. Because the Dutch system exempts real estate from annual mark-to-market taxation, property investments may become more attractive to some investors.

Some individuals may also increase their use of decentralised financial tools and privacy-focused technologies. However, regulatory scrutiny of such tools has intensified across Europe and North America, making this approach legally complex.

Avoiding taxes on unrealised gains

Investors concerned about unrealised gains tax can consider several legal strategies to reduce risk.

Portfolio diversification remains one of the most effective approaches. Holding a mix of asset classes can reduce exposure to any single tax policy.

Long-term planning also plays an important role. Investors should analyse how annual valuations might affect their liquidity needs and ensure they maintain sufficient cash reserves to meet potential tax obligations.

International mobility may also become an important factor. Some investors choose to relocate to jurisdictions with more favourable tax frameworks, though such decisions require careful legal and financial planning.

Readers interested in broader debates about cryptocurrency taxation can explore earlier analysis published in the article on the proposed capital gains tax hike and 43 percent levy on US crypto investors. That discussion highlights how rapidly tax policy in the digital asset sector is evolving.

The Dutch policy represents another step in this evolving landscape.

Implications for the cryptocurrency industry

From an industry perspective, unrealised gains taxation raises fundamental questions about the structure of digital asset markets.

Cryptocurrency was originally designed as a decentralised financial system independent of traditional institutions. However, as the industry has grown into a multitrillion-dollar market, governments have intensified efforts to regulate and tax it.

Policies like the Dutch unrealised gains tax could influence how investors manage their portfolios. Long-term holding strategies, commonly referred to as “HODLing”, may become less attractive if annual taxation forces investors to sell assets regularly.

At the same time, the policy could accelerate the migration of cryptocurrency businesses and investors toward jurisdictions with favourable regulatory environments.

In global finance, capital tends to flow toward stability, legal certainty, and predictable taxation.

The future of unrealised gains tax

Whether the Dutch model spreads internationally remains uncertain. Policymakers around the world will watch closely to see how the system performs after its 2028 implementation.

If the policy generates substantial revenue without triggering capital flight or market instability, it may influence debates in other countries. If it causes economic disruption, it could serve as a cautionary example.

For investors, the lesson is clear. Tax policy has become one of the most important variables shaping the future of cryptocurrency markets.

Understanding how unrealised gains tax works and preparing for potential policy changes will be essential for anyone holding digital assets over the long term.

The Netherlands may be the first major country to implement such a system. It is unlikely to be the last to explore the idea.

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