Why the Netherlands’ new crypto tax law could rewrite how investors hold and pay taxes—and what it means globally
Many crypto investors dream of holding Bitcoin or Ethereum for the long haul and cashing in only when the time is right. But what if you had to pay taxes on gains you haven’t realized, before you sell? That’s now a reality looming for Dutch crypto holders starting 2028, with a harsh 36% tax on unrealized gains. This article breaks down what this means, the risks, and how savvy investors are repositioning. If you hold crypto or plan to, understanding this tax shift is crucial to protect your portfolio and spot global tax trends early.
What Is the 36% Unrealized Gains Tax in the Netherlands?
Starting January 1, 2028, residents of the Netherlands will owe a flat 36% tax on the annual capital gains of investments—even if those investments aren’t sold. This includes stocks, bonds, and importantly, cryptocurrencies. Essentially, if your Bitcoin appreciates from $20,000 to $100,000 within a year, the government treats the $80,000 gain as income, taxing 36% of it—about $28,800—even if you haven’t sold a single coin.
Key features:
- Applies to unrealized gains: your paper profits trigger real tax bills
- Exempts some assets like real estate and startup shares—only taxable on sale
- Aimed to compensate for a €2.3 billion revenue gap after a Dutch court struck down the previous tax system
- Backed by a strong majority in parliament, signaling serious commitment
Answer Box: What is the Netherlands’ new crypto tax rule?
In 2028, Dutch residents will pay 36% tax on unrealized gains of investments, including cryptocurrencies, every year—even if they don’t sell. This means paper profits are treated like income and taxed annually.
Why Is This Tax So Controversial?
This tax flips the traditional investment logic. Usually, gains are taxed when realized—when you sell. Now, investors pay taxes on profits locked in digital wallets, without liquid cash to cover the tax bill. This scenario forces many to sell portions of their holdings, ironically creating downward price pressure.
The Dutch law’s double standard punishes highly liquid, tradable assets like cryptocurrencies but spares real estate and startup shares until sale—a move seen by many as unfair to innovative, digital wealth.
The Liquidity Death Spiral: How the Tax Could Crash Markets
Imagine this nightmare: Bitcoin surges to $150,000 on December 31, 2027. You owe tax on that valuation in January 2028. But then the market crashes to $60,000. You still must pay taxes on gains calculated at $150,000—even though your portfolio is now worth less. If you don’t have cash, you must sell crypto just to pay taxes, amplifying price drops. This cycle — selling to pay taxes → price drop → more selling — is called a liquidity death spiral.
For crypto, known for high volatility and double-digit yearly drawdowns, this tax could mean forced selling during downturns, worsening the market swings.
Data Callout: Global Debt and Tax Pressure
Global government debt hit record highs of $346 trillion in 2025. Desperate for revenue, policymakers are eyeing unrealized gains as a new tax base. The Netherlands may be the first, but not the last.
Is This Just a Dutch Problem?
Sadly, no. The Netherlands is the first domino, but similar ideas are stirring globally. The U.S. Biden administration proposed a 25% minimum tax on unrealized gains for ultra-wealthy Americans in 2025—a plan stalled but not dead. California and Illinois have floated similar ideas.
If the Dutch model raises substantial revenue without collapsing their market, expect more governments to take notes. The era of hard holding—meaning buying and holding through price swings without tax events—is under threat.
How Are Investors Preparing and Protecting Their Portfolios?
Smart investors are already moving to jurisdictions with crypto-friendlier tax policies:
- Portugal: Generally no tax on crypto held over 365 days for individuals
- UAE (Dubai): Zero personal income and capital gains tax; a global crypto hub
- El Salvador: Bitcoin transactions exempt from capital gains tax, despite some legal tender rule changes
Others are shifting toward privacy coins like Monero and Zcash, which mask transactions to avoid tax surveillance. However, regulators worldwide are increasingly cracking down on privacy coins, splitting the market into "white" compliant sectors and “shadow” underground sectors.
Risks and What Could Go Wrong
- Forced liquidations: Annual tax bills on unrealized gains could trigger mass selling during bear markets
- Tax bills exceeding portfolio value: Market crashes post-tax assessment could leave investors underwater
- Capital flight: Wealth migration to low or no-tax countries risks economic damage to home countries
- Underground economy growth: Increased use of privacy coins and unregulated transactions increase legal risks and volatility
- Policy reversals: Law opposition in Dutch coalition governments suggests possible repeals or modifications—uncertain policy environment
Actionable Summary
- The Netherlands will tax unrealized crypto gains at 36% starting 2028, forcing some investors to sell to pay taxes.
- This law punishes liquid digital assets while exempting illiquid assets like real estate.
- The liquidity death spiral risk makes forced selling cyclical and lowers market stability.
- Other countries may mimic this tax to plug budget gaps amid record government debt.
- Crypto-friendly jurisdictions and privacy coins present potential legal havens—at their own risks.
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FAQ
Q: What exactly are unrealized gains?
A: Unrealized gains are increases in the value of assets you hold but haven’t sold. These exist on paper until you sell.
Q: Why is taxing unrealized gains so problematic for crypto holders?
A: Because you might owe taxes on paper profits without liquid cash to pay, forcing sales that can crash prices.
Q: Are other countries likely to adopt similar taxes?
A: Possibly. The Netherlands is the first mover, but rising global debt and budget deficits make this an attractive revenue source worldwide.
Q: How can investors legally avoid or minimize these taxes?
A: Migration to crypto-friendly countries, holding assets in exempt categories, or using privacy coins (though with regulatory risks).
Q: Could this law be reversed?
A: The Dutch coalition government has expressed intentions to revisit the law, signaling uncertainty ahead.
Disclaimer: This article is for informational purposes only and does not constitute tax or investment advice. Always consult a qualified professional before making financial decisions.
By Wolfy Wealth - Empowering crypto investors since 2016
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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile
