The government has blinked on Box 3, and expats will pay for it

The Dutch government has finally admitted that taxing paper profits was a bad idea. But the way it plans to pay for its change of heart lands squarely on expats, and the window to prepare is closing.

In July I wrote in these pages that the government's Box 3 plans showed it did not know what it was doing. I argued that taxing unrealised gains every year would leave investors poorer, hand the treasury less money over time, and force people to sell at the worst possible moment.

Three months later, The Hague appears to agree. On 29 September the cabinet announced it would rewrite its own bill so that, from 2028, shares, bonds and funds are taxed only when you actually sell them. That is a genuine victory for common sense, and for every investor who wrote to their senator.

But nothing in Dutch tax comes free. Someone has to pay for the U-turn, and the cabinet's first answer was: savers, smaller investors and, by a quirk of timing, a lot of expats. If you are an international living here, 2027 could be the most expensive Box 3 year you have ever had. And the obvious trick of holding on and selling after you leave is not as simple as it sounds.

Back to the drawing board

It has been a chaotic year. The lower house passed the original Actual Return Act on 12 February, complete with its annual tax on paper gains. The Senate then stalled, postponed its vote at the end of June and waited for the promised amendments. On Prinsjesdag the cabinet admitted it had no majority and asked the Senate to park the bill. Two weeks later, under pressure, it produced a new plan.

The proposal on the table now looks like this:

•         From 2028: shares, bonds, funds and options move to a capital gains tax. You pay on growth only when you sell. The cabinet says this covers about 90% of Box 3 assets that change in value. Property was already going to be taxed this way.

•         In 2028 and 2029: savings, other receivables and crypto stay on the old "accrual" model, taxed on their annual movement, before moving to the realised system in 2030.

•         Every year: dividends and interest are still taxed in the year you receive them, at a proposed 36%.

•         To pay for it: in 2027 the tax-free allowance roughly halves, from €59,357 to €30,846 per person. The deemed return on investments rises to 7.87%, up from 6% in 2026. From 2028 the tax-free return falls from €1,800 to €1,000.

That last set of measures caused uproar during the budget debate. On 1 October finance minister Eelco Heinen said he was open to sparing smaller savers after all. So the funding is up in the air, and the whole package still needs Council of State advice and votes in both chambers.

So the direction is right, but the details aren't settled and nobody agrees on who pays. If you're trying to plan ahead, that's about as bad as it gets.

The 2027 squeeze

For many internationals, 2027 is the year Box 3 arrives at full force, and it may arrive at its most expensive setting ever.

Until now, many expats on the 30% ruling could opt for "partial non-resident" status. That treated them as foreign taxpayers for Box 2 and Box 3, so their savings and investments were largely outside Dutch tax. The option was abolished from 2025, but anyone who already had the ruling at the end of 2023 kept it under transitional rules. Those transitional rules end on 31 December 2026. In the same year, the 30% ruling itself drops to 27% for many newer arrivals.

So on 1 January 2027, a large group of expats steps into Box 3 for the first time. If the cabinet's original funding package survives, they step in just as the allowance is halved and the deemed return on investments jumps to 7.87%.

Let's take a single expat with a €300,000 portfolio, taxed at the current 36% rate:

Scenario	Annual Box 3 tax
2026 rules (if you were not exempt)	about €5,200
2027, allowance kept, higher deemed return	about €6,800
2027, as proposed on 29 September	about €7,600

That is roughly 2.5% of the portfolio, every year, whether the markets rose or not. Coming from zero, it is a shock. And it is a tax on a return the government simply assumes you made.

Selling after you leave

This is the question I hear most from expat clients. Under a realised gains tax it sounds perfect: never sell while you live here, move abroad, then cash in. It depends entirely on when you leave.

If you leave before 2028: the current system taxes a deemed return on what you own on 1 January. When you sell makes no difference, and there is no exit charge on an ordinary Box 3 portfolio. You simply stop being a Dutch taxpayer for it. Holding and leaving costs you nothing extra.

If you leave after 2028: expect the Netherlands to follow you out of the door. The bill already passed by the lower house treats emigration as a sale for assets under the capital gains regime, such as foreign property. It defers payment rather than collecting it on the day you leave. It would be astonishing if the amended bill does not do the same for shares and funds. Box 2 shareholders already know how this works: the "conservative assessment" sits on file and is collected when they eventually sell, with no expiry date since 2015.

So the dream of a tax-free exit is probably just that. But two details still work in your favour.

1.       The 2028 reset. Under the capital gains regime, your starting price is set at market value on 1 January 2028. Growth before that date is never taxed as a gain. Only growth while you are resident after 2028 is in scope.

2.       Deferral is still valuable. A claim that is only collected when you sell is an interest-free loan from the Dutch state. Your full portfolio keeps compounding in the meantime, which is exactly the point I made in July.

The reset also has a sting. If markets are down on 1 January 2028 and recover afterwards, the recovery is taxed as a gain, even though you made nothing overall. Losses from before 2028 cannot be carried into the new system.

One caution: the amended bill text is not public yet. How exit charges work for shares, and whether a fall in value after you leave reduces the claim, are the details to watch.

What can you do?

None of these are loopholes, and you should run your own numbers before acting on any of them.

1.       Favour accumulating funds.  From 2028, dividends and interest are taxed every year, but growth is taxed only on sale. A fund that reinvests its income internally turns taxable income into deferred growth. For long-term investors this could be the single biggest lever.

2.       Get the timing right on cash.  Until the end of 2027, money market and short-bond funds remain the tax trap I described in July: they are taxed as investments on a deemed 6% (possibly 7.87% in 2027) while earning a fraction of that, so keep cash in the bank for now. From 2028 the picture flips. Bank savings stay on the annual model until 2030, while an accumulating money market fund counts as a financial instrument whose return is taxed only when sold. Expect the government to look hard at this, so treat it as an opportunity to watch rather than bank on.

3.       Use the rebuttal scheme in 2026 and 2027.  If your actual return, including unrealised gains, is below the deemed return, you can pay tax on the actual figure instead. In a flat or falling year, that matters. Keep good records.

4.       Plan your departure date.  If you were going to leave around 2027 or 2028 anyway, leaving before the new regime starts avoids the exit question entirely.

5.       Allocate between partners.  Fiscal partners can still divide Box 3 assets as they choose. The tax authority has confirmed that the partial non-resident benefit applies only to the partner with the 30% ruling, so check your allocation before it ends.

6.       Be wary of the "invest through a BV" pitch.  For most expats it now costs more than it saves. More on that below.

7.       Pay down expensive debt, but don't necessarily reach for a pension.  Paying off a costly loan can easily beat a taxed investment return. The textbook advice is to move money into a pension or annuity product, taxed later in Box 1 instead of now in Box 3. I disagree. Dutch pensions combine the worst of both worlds: no guaranteed return, as in any defined contribution scheme, plus the rigidity of a defined benefit one: a retirement age that keeps rising and a pot you are forced to turn into lifelong payments. Those payments depend on interest rates that years of ECB policy have held down, and leaving the country brings its own tax claim on top.

One thing not to bother with: shuffling investments into cash just before 1 January. Anti-arbitrage rules already ignore those switches.

Investing through a BV

Ever since Box 3 reform was first floated, investors have been told to move their portfolios into a private limited company. I have said loudly, and often, that this is a bad idea for almost everyone. The new plans show why.

A BV doesn't lower your tax, it increases it. The company pays corporation tax of 19% on the first €200,000 of profit and 25.8% above that. When you take the money out, you pay Box 2 tax of 24.5% or 31%. Put together, that is roughly 39% to 49%, against 36% in Box 3.

The BV only ever had one real argument in its favour: it taxes gains when you sell, while the original plan would have taxed paper gains every year. That was the only scenario in which a BV could win, and it was the scenario its promoters were selling. The government has now proposed dropping it for shares and funds from 2028. Take away the annual tax on paper gains, and all that remains is the increased rates.

Even in 2026 and 2027 the case is thin. Under today's system a good investor pays on a deemed 6% or 7.87%, whatever they actually make. On a 10% return that is an effective rate of about 28%, far below anything a BV can offer once the money comes out.

Those who rushed into a BV after February's vote now own a structure that is expensive to run and expensive to leave. Winding it up triggers Box 2 tax. Emigrating creates a conservative assessment that, since 2015, never expires. And the cabinet's list of options to fund the reform includes scrapping the 19% corporation tax band and cutting the excessive borrowing limit from €500,000 to €100,000.

If you are already in that position, there is one consolation. The top Box 2 rate is set to fall to 29.2% from 2027 to 2030, which makes those years the cheapest window to pay out or wind down. If you want out, that's when to do it.

I said it then and I will say it again: a BV defers tax, it does not reduce it. Now the new box 3 system will defer tax a BV offers no benefits, only extra costs.

How does 36% compare to the rest of the world?

Let's be clear: moving to a tax on realised gains is good news for everyone. But the new changes takes us from a disastrously painful system to a very painful one. The Netherlands has gone from heading for the most punishing capital gains tax system in the world to merely the fourth most punishing.

Country	Top rate on share gains
Denmark	42%
Norway	37.8%
Netherlands	36%
France	34%
Ireland	33% (38% on funds)
Germany	26.4%
Canada	about 27% (half the gain taxed)
United States	23.8% (federal)
United Kingdom	24%
Australia	about 23.5% (half the gain taxed after a year)
Japan	20.3%
Belgium	10% above €10,000
Switzerland, Singapore, Hong Kong, UAE	0%

Only Denmark, Norway and Ireland (on funds) charge more on paper, and the two Scandinavian countries have lower rates for smaller investors.

The bigger problem is what the table doesn't show. Most of these countries give ordinary savers somewhere to invest tax-free. The British have ISAs, the Swedes their investment savings accounts, the Americans Roth IRAs, the Canadians TFSAs. The Dutch have nothing comparable. The choice is a pension that forces you into an annuity, or a BV that taxes you twice.

Add a tax-free allowance of just €1,000 and dividends taxed at 36% every year, and the Netherlands remains one of the most expensive places in the world to build wealth through investing. Yet there are no other less taxable options to grow one's wealth in The Netherlands outside your first property.

Have they learned?

I'll give the government this much: taxing gains when they are realised is how almost every other country does it, and the government has finally accepted that. But it took years of court defeats, a Senate revolt and a near-collapse of the budget to get here. And its first instinct for paying the bill was to raise the very fictional-return tax it claims to be abolishing.

For expats, the message is simple. 2027 is likely to be expensive, leaving after 2028 will probably not let you escape tax on gains made here, and the rules are still moving. The people who come out best will be those who plan now rather than in December 2027.

On the bright side, the Government moved away from an unrealised taxation system which would have been catastrophic. Whilst the new system isn't everything I would hope for, it does provide some comfort that the Goverment is learning. Slowly.