RE: LeoThread 2026-03-04 13-53

The Netherlands was forced to tax unrealized gains after the Supreme Court struck down the old Box 3 system in 2021

The previous framework assumed a fictional rate of return and taxed profits that were never actually realized; the court found it unconstitutional

That ruling created an estimated €2.3 billion annual gap and left no legal method to tax investment returns

Parliament approved a replacement with 93 votes (75 required). Several parties that voted yes said taxing unrealized gains wasn’t their preference, but they backed the bill to avoid collecting nothing on investment returns and to prevent refunding about €1.2 billion in overpaid taxes from the illegal system

France’s experience is instructive: between 1988 and 2007 an estimated €200 billion in capital left the country, and roughly 60,000 wealthy individuals departed between 2000 and 2017; the wealth tax produced an approximate €7 billion annual fiscal shortfall, about twice its revenue, and was abolished in 2018

The Dutch proposal is more aggressive: instead of a progressive tax on total wealth starting near 0.5%, it taxes annual paper gains at a flat 36% — a €100,000 unrealized increase would trigger a €36,000 cash tax without any sale

To address liquidity issues, the law exempts real estate and startup shares; publicly traded stocks, bonds, and crypto would receive no such protection

The bill still needs Senate approval and targets implementation in 2028. With free movement of capital and people in the EU, relocation to nearby jurisdictions like Portugal, Malta, or Cyprus is feasible

This matters for the United States because unrealized-gains taxation keeps reappearing in policy proposals: a California wealth-tax initiative has prompted capital flight warnings estimated at $2 trillion, and federal proposals have targeted unrealized gains above $100 million. The Netherlands is poised to be the first country to broadly implement such a system at scale, repeating France’s experiment at a 36% rate