The Netherlands is changing its investment tax system in 2028, replacing fictional returns with actual return taxation. From 2028 onwards, investors will be taxed on their unrealized gains in Box 3 under the Actual Return Act. For investors, this shift introduces challenges, especially for retail investors with limited capital.
Understanding the 2028 Box 3 Actual Return Act
On February 12th, the Dutch House of Representatives approved the Box 3 Actual Return Act, with implementation planned for January 1, 2028. It introduces new frameworks with two distinct taxation methods for investors.
Under the new taxation law, Capital Growth Tax (Vermogensaanwasbelasting) will apply to most market assets. This includes stocks, bonds, and cryptocurrencies, for which the tax authorities will seek to collect 36% tax on both realized (dividends, interest) and unrealized gains. For example, if your portfolio appreciates by €10,000 in a single year, the tax authorities will seek €3,600 in tax.
The tax authorities provided guidelines for other investment types, such as real estate and startup shares. Value appreciation is taxed only upon the sale of assets, not annually.
Impact on wealth accumulation and investments
Under the 2026 system with its 6% fictional return rate, investors face an effective tax rate of 2.16% on investments. With a 9% annual return on a globally diversified portfolio, net returns reach 6.84% after tax.
Starting from 2028, the same 9% return now faces a 36% tax, creating an additional burden of 3.24%. For investors, it reduces net returns to 5.76%, resulting in a 50% increase in tax compared to the current minimum rate.
For strategies with compounding effects, investors cannot reinvest the tax amount, and over 20 years, it hinders growth potential. For example, if someone is investing €500 monthly at 9% returns, that would add up to €333,943 over 20 years. From 2028, under the new rules where 3.24% is effectively lost, the same contribution would yield only €224,563 over 20 years.
Managing unrealized gains and strategies
Taxing unrealized gains changes how investors build their portfolios and allocate capital. In the Netherlands, buy-and-hold strategies will change, as tax bills will reflect paper appreciation regardless of whether there’s a sale.
For investors who don’t have additional capital, this will create unwanted financial pressure, forcing them to either exit positions to cover taxes or change their strategy. However, the loss carry-forward provision implemented provides a buffer. In years when markets decline, you pay no wealth tax and can offset those losses against future gains.
It helps reduce sequence-of-returns risk by lowering tax bills when portfolio values drop. However, the Netherlands will only allow up to €500 to be offset. That’s why timing your investment matters more before 2028, as it can benefit from a lower tax rate compared to what’s to come.
Strategic positioning for 2028 and beyond
From 2028 onwards, investing strategies similar to those in the US will no longer be effective. This will put Dutch investors at a disadvantage since banks don’t provide high yields, and even higher returns will be taxed at 36%.
It’s worth understanding the complete picture. Real estate and startup investments are only taxed when sold, and this creates new investment opportunities. For liquid investments subject to the capital gains tax, the loss carry-forward provision changes risk management. Volatile assets like crypto, which previously seemed tax-inefficient, may become more acceptable when losses offset future gains.
Alternatives with higher and more predictable yields can address a key market need. Yieldfund, a quantitative trading company based in the Netherlands, offers annual returns of up to 48% with weekly payouts, providing a practical and reliable option. Weekly payouts will make it easier for investors to set aside their tax amount, but also provide access to capital.
For investors and wealth builders concerned about the 2028 reforms’ impact on compound growth, alternatives will provide a fundamentally different approach: prioritizing consistent realized returns over long-term capital appreciation.
Adapting to the changes
The new Act will most likely spark further debate in the EU over how investments should be taxed. However, taxing unrealized gains for some seems too strict, as it creates liquidity concerns.
Investors can get a head start by adapting and seeking strategies to help maximize their returns. The first step is to calculate the effective tax rate under the 2026 fictional return approach versus the projected 2028 actual return taxation, and adjust their strategies accordingly.
It’s important to consult tax advisors specialized in Box 3, as the transition from fictional to actual returns can trigger one-time valuation resets that may result in deemed gains or losses. For regular and even seasoned investors, the change in legislation and taxation is set to create uncertainty in the first few months.
