The Dutch government has announced a fundamental overhaul of wealth taxation that will transform how investment returns are calculated and taxed. Starting in 2028, the current system of taxing fictional returns in Box 3 will likely shift to a vermogenswinstsystematiek (capital gains system), where you pay tax only when you actually realize profits. This change, buried in the latest coalition agreement, has set off alarm bells across the Netherlands’ growing FIRE (Financial Independence, Retire Early) community and among international residents who have built their financial plans around the old rules.
From Fictional Returns to Real Capital Gains
Currently, Box 3 taxes your wealth based on presumed returns. For 2026, the Belastingdienst (Tax Authority) assumes you earn 6.37% on investments and 1.44% on bank savings, regardless of your actual performance. You pay 36% tax on these fictional returns, meaning you’re taxed on money you never made if your real returns fall short. Conversely, if your investments outperform, you keep the excess tax-free.
The coalition agreement states: “We stimulate long-term investments by developing the new Box 3 system based on actual returns into a capital gains system.” This signals a move toward taxing only realized gains, similar to how capital gains tax works in the US or UK.
The Current System’s Math
Let’s make this concrete. If you have €500,000 in investments in 2026:
- Assumed return: 6.37% = €31,850
- Tax due: 36% of €31,850 = €11,466
- Effective tax rate: 2.29% of your total wealth, regardless of actual performance
If your actual return was only 2% (€10,000), you still pay €11,466. If your return was 10% (€50,000), you still pay only €11,466. This system is simple but deeply flawed, as the Hoge Raad (Supreme Court) ruled in 2024 that taxing fictional returns violates property rights when they exceed actual returns.
What the New System Could Look Like
While details remain scarce, the vermogenswinstsystematiek would likely work as follows:
- You only pay tax when you sell assets and realize gains
- The tax rate would apply to actual profits, not presumed ones
- Losses could potentially be offset against gains (currently impossible with fictional returns)
- The tax might be levied at the same 36% rate, but only on real income
This sounds fairer, but it introduces new complexities that could threaten FIRE strategies in the Netherlands and create perverse incentives.
The FIRE Community’s Calculus Just Broke
For those pursuing Financial Independence, the new system fundamentally alters the math. Under the current fictional return system, you could calculate your tax burden decades in advance with certainty. A €1 million portfolio meant approximately €22,900 in annual Box 3 tax (2.29% effective rate), whether markets crashed or soared.
Under a capital gains system, your tax burden becomes unpredictable. A market crash could wipe out gains for years, leaving you with zero tax liability but also zero income. A bull market could trigger massive tax bills precisely when you don’t want to sell assets.
The sequence-of-returns risk becomes catastrophic. Imagine retiring in 2028 with a €1 million portfolio, then facing a 30% market crash. Your portfolio drops to €700,000. Under the old system, you’d still owe ~€16,000 in Box 3 tax. Under the new system, you owe nothing, but you also can’t offset that loss against future gains in many scenarios. When markets recover, you’ll pay full tax on the recovery gains without getting relief for the prior loss.
This uncertainty has many in the Dutch FIRE community considering emigration to countries with more favorable tax treatment for long-term investors.
Who Wins and Who Loses
The reform creates clear winners and losers:
Winners:
– Conservative investors with low returns currently taxed on fictional high returns
– Market timers who can strategically realize gains in low-income years
– International comparison: The Netherlands becomes more normal compared to other countries
Losers:
– Long-term buy-and-hold investors who will see compounding severely impacted
– High-growth investors who now pay tax on actual high returns instead of fictional lower ones
– Retirees with volatile income streams facing unpredictable tax bills
– Middle-class savers who feel punished for investing rather than spending
The debate over whether this is a fairer system or wealth confiscation centers on this trade-off: simplicity and predictability versus theoretical fairness.
The Beleggings BV Boom
Savvy investors are already exploring workarounds. The Beleggings BV (investment corporation) structure is gaining popularity as a way to escape Box 3 wealth taxes entirely.
Here’s how it works: Instead of holding investments personally (Box 3), you place them in a private limited company (BV). The BV pays corporate tax (typically 19-25.8%) on profits, and you only pay personal tax when you withdraw dividends. While the total tax burden can be similar, you gain enormous flexibility:
- No wealth tax on the BV’s assets
- Tax deferral by leaving profits in the BV
- Interest deduction if you loan money to your BV
- Estate planning benefits
The coalition agreement explicitly mentions investigating this trend, suggesting future crackdowns. But for now, it’s a legal and increasingly popular strategy.
Timing Uncertainty Creates Planning Chaos
The biggest immediate problem isn’t the policy itself, it’s the uncertainty. The government targets 2028 implementation, but the legislative process is complex. The Wet werkelijk rendement (Actual Return Act) must pass both houses of parliament, survive potential legal challenges, and withstand changes in political winds.
PWC analysts note: “The description in the coalition agreement is a sentence without much meaning. The reality is that a capital gains tax is inevitable because other systems aren’t viable short-term. It would surprise me if they implement this by 2028. Once it’s in place, I doubt there will be political support for another radical reform.”
This means Dutch families are already gaming the 2028 overhaul by restructuring assets now, unsure whether the rules will actually change or how exactly they’ll work.
The 6.37% Problem
Here’s a critical detail: The fictional return percentages keep rising. For 2027, the investment return assumption jumps to 6.37%, up from 6.00% in 2026. This means your effective wealth tax rate increases from 2.16% to 2.29% even if your actual returns don’t change.
Many investors call this paying taxes on money they never made. If you earned 4% actual return in 2027, you’re still taxed as if you earned 6.37%. On a €500,000 portfolio, that’s a €4,250 difference in taxable income.
The capital gains system would fix this specific injustice, but it introduces new ones.
International Residents Face Extra Complexity
If you’re an expat or international resident in the Netherlands, the reform creates additional headaches:
- Foreign assets may be taxed differently under bilateral tax treaties
- Transition rules could create double taxation if you move countries
- Reporting requirements will likely become more complex
- Wealth tax treaties with Belgium and France may need renegotiation
The current system at least offered simplicity: you reported your worldwide assets each January 1st and paid a predictable tax. A realization-based system requires tracking purchase dates, cost bases, and sale proceeds across multiple jurisdictions, administrative work that will force many to hire expensive tax advisors.
Actionable Steps Before 2028
1. Maximize Tax-Advantaged Accounts
Ensure you’re using all available heffingsvrij vermogen (tax-free wealth allowance) and consider lijfrente (annuity) products that fall under Box 1 instead.
2. Consider Asset Location
Hold high-growth assets in structures that can benefit from the new loss offset rules, and low-growth assets where the fictional return system currently penalizes you.
3. Evaluate Beleggings BV
If you have substantial assets (typically €250,000+), the costs of establishing a Beleggings BV may be justified by the tax flexibility.
4. Plan Realization Timing
If the reform passes, consider strategically realizing gains before 2028 under the old system, or deferring them until after implementation depending on your expected returns.
5. Monitor Political Developments
The minority government needs opposition support. Follow the debate and be ready to adjust plans as details emerge.
The Bottom Line
The Box 3 reform represents the most significant change to Dutch wealth taxation in decades. While taxing actual returns sounds fairer than fictional ones, the implementation challenges and uncertainty create new risks.
For FIRE practitioners, the reform threatens the mathematical certainty that made early retirement planning possible. For middle-class savers, it may feel like punishment for investing rather than spending. And for international residents, it adds another layer of complexity to an already confusing system.
The key is to stay flexible. Don’t make irreversible decisions based on draft proposals, but do structure your finances to adapt quickly once the final rules emerge. The one certainty in Dutch tax law is that it will continue to change, often in ways that require you to pay taxes on gains you haven’t actually realized.
Your next move: Review your investment structure with a tax advisor familiar with both the current fictional return system and the proposed capital gains system. The difference could save, or cost, you thousands of euros annually.
