Taxing Unrealized Crypto Gains in the Netherlands
The news that the Netherlands will start taxing unrealized gains from crypto investments starting in 2028 has sparked a strong reaction in the crypto community. Many perceive this as an attack on crypto assets and believe it will lead to an outflow of investments from the country. However, the reality is more complex and nuanced.
What exactly are the Dutch authorities planning to do? Under the new rules, from 2028 onwards, individuals whose total assets exceed €50,000 will have to pay tax on the presumed income from these assets. That is, tax will be levied not only on realized, but also on unrealized gains. This will affect not only cryptocurrencies, but also other investments — stocks, bonds, real estate, and so on.
Why has this sparked such a negative reaction? Crypto investors have perceived this innovation as a tax on paper profits. After all, until the asset is realized, the income remains unrealized, and the tax will have to be paid out of one's own funds. This can create liquidity issues, especially for holders of cryptocurrencies who do not receive a stable cash flow.
Is the situation really that straightforward? No, the situation is more nuanced. Firstly, the tax will only be levied on wealthy citizens, and not on all investors. Secondly, the tax rate will be relatively low - around 1.2% of the presumed profit. And thirdly, taxpayers will be able to deduct losses from other investments from the taxable base.
Thus, although the innovation is causing discontent in the crypto community, it is unlikely to lead to a massive outflow of investments from the Netherlands. Rather, it is part of a general trend towards closer scrutiny of the incomes of wealthy citizens. And from the government's perspective, this may be a justified measure to replenish the budget.