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Europe's First Unrealized Gains Tax Just Passed · IMI Podcasts

• 0:00
  SPEAKER_00: Let's say your investment portfolio goes up 10,000 euros this year.
• 0:04
  SPEAKER_00: You don't sell or cash out, but the Dutch government sends you a tax bill for almost€4,000.
• 0:10
  SPEAKER_00: That's the law the Netherlands just passed.
• 0:13
  SPEAKER_00: Starting January 2028, Dutch residents will pay 36% tax on paper profits from stocks, bonds, and crypto, even if they never sell a single asset.
• 0:24
  SPEAKER_00: In this video, we'll cover how this unrealized gains tax works and the dire warning for you, even if you're not a tax resident in the Netherlands.
• 0:33
  SPEAKER_00: Why is this happening?
• 0:35
  SPEAKER_00: Well, simply put, the Netherlands is doing this because their Supreme Court forced the government's hand.
• 0:40
  SPEAKER_00: The old Dutch system taxed investment income based on assumed returns.
• 0:45
  SPEAKER_00: The government would calculate a fictional rate of return and tax you on that, regardless of what you actually earned.
• 0:51
  SPEAKER_00: In December 2021, the Supreme Court ruled that this system violated property rights under the European Convention on Human Rights.
• 0:59
  SPEAKER_00: Taxing people on income they never received was unconstitutional.
• 1:03
  SPEAKER_00: Since then, the government has been scrambling to find a replacement for the lost revenue.
• 1:08
  SPEAKER_00: Every year without a fix cost the Treasury an estimated€2.3 billion.
• 1:14
  SPEAKER_00: So lawmakers faced a choice: tax unrealized gains now or wait years to build a system that only taxes gains when you actually sell them.
• 1:23
  SPEAKER_00: They chose the quick fix.
• 1:24
  SPEAKER_00: How the new system works?
• 1:26
  SPEAKER_00: The Netherlands divides personal income into three boxes.
• 1:29
  SPEAKER_00: Box 1 covers employment income.
• 1:31
  SPEAKER_00: Box 2 covers income from owning at least 5% of a company.
• 1:35
  SPEAKER_00: And box 3 is the one that just got overhauled, covering savings and investments.
• 1:40
  SPEAKER_00: Under the new system, box 3 taxes actual returns at a flat 36% rate.
• 1:46
  SPEAKER_00: But actual returns now includes unrealized gains.
• 1:50
  SPEAKER_00: If you hold€110,000 in stocks on January 1st and they're worth€110,000 on December 31st, you owe tax on that€10,000 increase.
• 2:02
  SPEAKER_00: Even if you never sold a single share and can't use those funds.
• 2:05
  SPEAKER_00: There's a small exemption.
• 2:07
  SPEAKER_00: The first 1,800 euros in annual returns is tax-free.
• 2:11
  SPEAKER_00: Anything above that gets taxed at the full 36%.
• 2:14
  SPEAKER_00: If you have a bad year, you can carry that loss forward indefinitely and use it to offset gains in future years.
• 2:21
  SPEAKER_00: But only losses exceeding 500 euros qualify.
• 2:24
  SPEAKER_00: What's included and what's exempt?
• 2:27
  SPEAKER_00: So the question on every investor's mind has to be what is included in box three and what isn't.
• 2:33
  SPEAKER_00: Not every asset gets the same treatment.
• 2:35
  SPEAKER_00: Stocks, bonds, mutual funds, ETFs, and crypto are all subject to the annual mark-to-market approach.
• 2:43
  SPEAKER_00: The tax authority assesses your portfolio every year and taxes the change in value.
• 2:48
  SPEAKER_00: But real estate and shares in qualifying startups follow different rules.
• 2:52
  SPEAKER_00: For those assets, the government uses a traditional capital gains approach.
• 2:57
  SPEAKER_00: You only pay tax on the appreciation when you sell or dispose of the asset.
• 3:01
  SPEAKER_00: The government explicitly acknowledged that forcing people to pay tax on paper gains in illiquid assets creates serious problems.
• 3:09
  SPEAKER_00: If your rental property appreciates but you don't sell it, you don't have cash to pay a tax bill.
• 3:14
  SPEAKER_00: Crypto and stocks didn't get the same consideration.
• 3:17
  SPEAKER_00: This exemption for real estate is worth paying attention to if you're thinking about restructuring.
• 3:22
  SPEAKER_00: And if you're considering relocating to a country with a golden visa program, real estate often serves double duty.
• 3:29
  SPEAKER_00: It qualifies you for residency, and it's a more tax-efficient asset class in many jurisdictions.
• 3:35
  SPEAKER_00: By the way, IMI has a database of RCBI qualifying properties at IMI Real Estate, if that's a path you're exploring.
• 3:43
  SPEAKER_00: The liquidity problem.
• 3:45
  SPEAKER_00: Okay, so the sharpest criticism is about the bill's own explanatory memorandum that acknowledges what it calls liquidity risk.
• 3:53
  SPEAKER_00: Think about what this means in practice.
• 3:56
  SPEAKER_00: You buy Bitcoin, it doubles over five years.
• 3:59
  SPEAKER_00: You never sell because you believe in the long-term thesis.
• 4:02
  SPEAKER_00: Yet every single year you owe 36% on that year's gain, even though you have no cash from the investment.
• 4:09
  SPEAKER_00: Where does that money come from?
• 4:10
  SPEAKER_00: You either sell some of your position to pay the tax, which might trigger even more tax and defeats the purpose of holding, or you pay out of pocket from other income.
• 4:20
  SPEAKER_00: For high net worth individuals with diversified income streams, this is annoying but could be manageable.
• 4:26
  SPEAKER_00: For someone who's crypto heavy or concentrated in a single asset class, it could force liquidation at the worst possible time.
• 4:33
  SPEAKER_00: Cointelegraph reported that many Dutch crypto holders are already considering leaving the country.
• 4:39
  SPEAKER_00: According to De Nederlandse Bank, indirect crypto investments held by Dutch entities reached 1.2 billion euros by October 2025, up from 81 million euros at the end of 2020.
• 4:52
  SPEAKER_00: That's a lot of paper gains that are about to become taxable.
• 4:55
  SPEAKER_00: How this compares to Europe?
• 4:57
  SPEAKER_00: So, in the grander scheme of things, how do other European jurisdictions compare to the Dutch approach?
• 5:03
  SPEAKER_00: Well, almost no other European country does this.
• 5:06
  SPEAKER_00: Most European nations that tax capital gains do so only upon realization, when you actually sell.
• 5:12
  SPEAKER_00: Norway taxes capital gains at realization.
• 5:16
  SPEAKER_00: Germany applies a flat 25% withholding tax on investment income, also at the point of sale.
• 5:22
  SPEAKER_00: France, Austria, Denmark, they all wait until you sell.
• 5:25
  SPEAKER_00: For context on how the Dutch top rate compares with the rest of Europe, at 49.50% on employment income, it's among the highest in Europe.
• 5:35
  SPEAKER_00: Denmark leads at 55%, followed by France at 55.4%, and Austria at 55%.
• 5:42
  SPEAKER_00: At the lower end, Bulgaria and Romania levy a flat 10%, and Hungary's top rate is 15%.
• 5:48
  SPEAKER_00: Eastern Europe, as you can see, has far friendier normal tax systems than Western Europe does.
• 5:54
  SPEAKER_00: The Dutch approach of assessing portfolios annually and taxing the change in value is an outlier.
• 6:01
  SPEAKER_00: Several parties in the governing coalition have acknowledged this and have said publicly that taxing unrealized gains isn't their preferred approach.
• 6:09
  SPEAKER_00: But they backed the legislation because they needed a legally viable framework, and this was, again, the quick fix.
• 6:16
  SPEAKER_00: The stated goal is to eventually transition toward a realized capital gains model, but eventually could be years away.
• 6:24
  SPEAKER_00: If you're considering tax residency in the Netherlands or already are one, you have roughly two years to figure out your strategy before this takes effect in 2028.
• 6:34
  SPEAKER_00: Option one is to restructure your portfolio.
• 6:37
  SPEAKER_00: Recall that real estate and qualifying startup shares are exempt from the annual mark-to-market approach.
• 6:43
  SPEAKER_00: Option two is to use the loss carry forward provision strategically.
• 6:47
  SPEAKER_00: If you expect volatility, timing your gains and losses across years could help manage your tax burden.
• 6:53
  SPEAKER_00: And of course, option three, the most effective option, is to relocate.
• 6:57
  SPEAKER_00: If you establish tax residency in a country that doesn't tax unrealized gains, the Dutch rules no longer apply to you.
• 7:04
  SPEAKER_00: Countries like Italy, Greece, Malta, and Cyprus offer favorable tax treatments for new residents, including flat tax options, territorial taxation, and in some cases, complete exemption on foreign investment income, which you can learn more about in the video linked at the end of this video.
• 7:22
  SPEAKER_00: If you're serious about exploring relocation in Europe, our programme Finder map and tool can help you sort, filter and compare residency and citizenship based on your goals, and you can connect with vetted professionals through our Finder Pro directory.
• 7:38
  SPEAKER_00: If you're considering a move to a more tax-friendly jurisdiction in Europe, yes, they do exist.
• 7:43
  SPEAKER_00: Check out the video on your screen on the best special tax regimes in Europe.
• 7:48
  SPEAKER_00: We compare Italy's flat tax, Greece's non-DOM program, Malta's remittance basis, and several others.
• 7:55
  SPEAKER_00: And don't forget to give this video a like and subscribe for more.
• 7:58
  SPEAKER_00: The algorithm will show this to more people as a result, and we can continue making videos like this for people like you.