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This article has been automatically translated from Dutch. Click here to see the orginal article including all links to sources.
The introduction of the new Box 3 tax law from 2028 will have major consequences for anyone attempting to build wealth independently over the long term. In this weekly selection, we analyse why the new Box 3 tax is destructive to wealth accumulation. What exactly is wrong with the new tax plan?
There may be no more fitting day than Friday the 13th to discuss a new tax—certainly not a tax with so many flaws. Last Thursday, the Dutch House of Representatives approved a new wealth tax on precious metals, equities, cryptocurrencies and second homes. According to several media outlets, the reluctance was considerable, yet this did not prevent 93 of the 150 MPs from voting in favour of the change.
The so-called Real Return Act—which, as we will see, does not actually tax real returns—will determine the taxation of income from savings and investments in Box 3 from 2028 onward. The intention is to abandon a system based on deemed returns and move to one in which tax is levied on actual returns. That may not sound unreasonable in itself, but a crucial flaw is that the system introduces an annual tax on unrealised gains, rather than on gains that have actually been received.
It is therefore a wealth accrual tax, not a capital gains tax, which is the standard elsewhere in Europe. Only returns from the sale of a home or shares in start-ups are taxed upon realisation—when the asset has actually been sold.
Many politicians regard this flawed tax as temporary and are voting for its introduction now, with the promise of revising the system later. The argument is that implementation before 2028 would otherwise be unfeasible, forcing spending cuts. Having to rely on the assumption that this tax is temporary offers little reassurance. Economist Milton Friedman already warned in the 1980s: “Nothing is so permanent as a temporary government program.”
GreenLeft–Labour, the Socialist Party, the Party for the Animals and Volt voted in favour, as did the coalition parties D66, VVD and CDA. Voting against were PVV, Group Markuszower, Forum for Democracy, BBB, JA21, SGP, Christian Union, 50PLUS and DENK. The proposal must still be approved by the Senate. However, since the parties that voted in favour also hold a majority there, approval is highly likely. Implementing the law will require one thousand civil servants—but that is not the biggest issue.
This tax—set at a steep 36% on unrealised gains, with an annual tax-free allowance of just €1,800—has several serious shortcomings. The first and most obvious is that investors may be forced to sell part of their underlying investment. Equity specialist Niels Koerts illustrates this with the following example:
“A family member of mine achieved a return in 2025 comparable to his net annual salary—€60,000. Had this return been realised in 2028, he would have owed €20,952 in Box 3 tax on that amount. That equals 35% of his net salary. Very few people can simply pay that to the tax authorities. The result is that he would have to sell part of his investment portfolio.”
It may also occur that the value of an investment declines after the reference date of 1 January. Even if the entire paper gain subsequently evaporates, the tax assessment remains based on the value at the reference date. You are then required to pay tax on gains that no longer exist. In certain cases, the tax due can even exceed the eventual profit, causing total wealth to decline. A numerical example of this can be found here.
In addition, losses cannot be freely offset, as there is no loss carryback. Niels Koerts explains:
“Suppose you pay €10,000 in Box 3 tax in 2028 on paper gains, but suffer a comparable loss in 2029. You do not get that €10,000 back immediately. You must first make a profit again in 2030 before the loss can be offset.”
Nor does the system account for real returns, as there is no inflation adjustment. Suppose inflation is 5% in a given year and your investment portfolio also generates a 5% return. You are then taxed on this ‘return’, even though your purchasing power has not increased at all. In fact, after tax, this scenario results in a net loss of purchasing power.
Furthermore, the tax rate of 36% is exceptionally high. In a European context, this is among the highest rates for such a levy. By comparison, the European average is around 20%.
All of this has a destructive effect on what is often called the eighth wonder of the world. Compound interest causes wealth to grow at an accelerating pace, as returns are also earned on previously accumulated gains. The negative impact of the new tax therefore compounds over time and, by the time someone reaches retirement age, can amount to losses of hundreds of thousands—or even millions—of euros.
Example: long-term impact of the new tax (source: investingvisuals)
Several calculations now illustrate the destructive long-term effect of the new tax. The chart above shows the potential impact over time. Someone who starts investing at age 25 with €10,000 and contributes €1,000 per month can accumulate over €3.3 million over 40 years under the current system. Under the new wealth tax, the outcome is dramatically different. After 40 years of compound growth, only €1,885,000 remains—a difference of €1,435,000 compared to the current regime.
To assess the impact on your personal situation, you can use this handy calculator developed by an X user.
The new law therefore represents a serious obstacle to wealth building, and by extension affects social mobility and individual freedom. Unsurprisingly, a veritable tsunami of criticism has erupted on social media.
People see the retirement age rising and increasingly want—or, as entrepreneurs, are forced—to arrange their own pension independently of the state. It is precisely this group that is hit by the new measure. The same applies to young people who are excluded from the housing market and therefore attempt to build wealth through investing. This policy will primarily affect the middle class, not the truly wealthy, who often invest via Box 2 structures or have already relocated their tax residence. The measure may also harm the Dutch business climate by making it harder to attract employees to a country with unfavourable taxation.
In order to avoid implementing €2 billion in spending cuts in the short term, politicians are choosing to obstruct wealth accumulation for Dutch citizens—at the cost of potentially severe long-term losses. And not only through reduced compound interest. Critical reactions also indicate that an increasing number of people are considering leaving the country. We have seen this before in recent years in Norway and the United Kingdom, where changes to wealth taxation led to significant capital flight. A classic illustration of the Laffer curve: higher tax rates do not always result in higher tax revenues.
The proposal has not only sparked debate domestically, but has also drawn international attention. Shopify CEO Tobi Lütke responded sharply:
“This is the dumbest policy being pursued by any government on this planet right now. And that’s saying something.”
In our podcast next week, we will take a deeper dive into the new Box 3 law and its implications for savers and investors. To be continued.
