If you live in the Netherlands and have savings, investments, or other assets, this is something you should be aware of.The Dutch Parliment has approved a major reform to Box 3 (the tax on wealth and assets). The new system is expected to take effect on January 1, 2028, subject to final approval by the Senate of the Netherlands.So what does this actually mean? Let’s break it down.
What Is Box 3?
The Dutch tax system is divided into three “boxes.”Box 3 applies to personal wealth and assets - not salary income. It generally includes:
Your primary residence is not included in Box 3.Until now, the Dutch tax authorities did not tax your actual returns. Instead, they calculated a deemed (assumed) return on your assets and taxed you based on that — even if your real return was lower.This system has faced significant legal criticism, which led to the reform.
What Will Change Starting in 2028?
The key change:
Tax will be based on your actual return, rather than an assumed return.At first glance, this sounds fairer. However, there is an important detail:The taxable return will include unrealized gains. This means that if your stocks, funds, crypto, or other assets increase in value, the increase may be taxed - even if you have not sold them.
A Simple Example
Let’s say your investment portfolio is worth €100,000 at the beginning of the year.
At the end of the year, it is worth €130,000.You did not sell anything.Under the new system, the €30,000 increase would be considered taxable income. The expected tax rate is around 36%.Even though the money is still “on paper.”
Why Is This Significant?
Because it could create situations where:
For investors - especially those with volatile assets like crypto - this is a major structural change.
How Does This Affect Foreigners Living in the Netherlands?
If you are a tax resident of the Netherlands, the rules apply to you regardless of your nationality.This is particularly relevant for Israelis who hold:
The tax treaty between the other countries and the Netherlands remains in force and is designed to prevent double taxation. However, it does not exempt you from paying Dutch tax if you are a Dutch tax resident.
Who Should Start Preparing Now?
Although the reform is expected to take effect in 2028, long-term tax planning should begin well in advance.
Bottom Line
The Netherlands is moving from a system based on assumed returns to one based on actual returns - including unrealized gains. For some taxpayers, this may feel fairer.
For active investors, it could significantly increase tax exposure.When dealing with cross-border assets between Israel and the Netherlands, it is strongly recommended to consult a tax advisor familiar with both systems.If you would like, I can also prepare a follow-up article with detailed numerical scenarios (foreign rental property, investment portfolio, crypto, etc.) to illustrate the real impact.