On Thursday, the Dutch House of Representatives approved the Real Return Tax Act in Box 3 (Wet werkelijk rendement box 3), set to take effect on January 1, 2028. Under this reform, the Netherlands will impose a 36% tax on unrealized gains from investment assets, including crypto, stocks, and bonds.
Notably, the new system will tax annual increases in asset value, rather than only taxing gains when assets are sold and profits are realized.
In other words, if an individual’s crypto or stock portfolio increases in value a given year, that gain may be taxed—even if the investor has not sold the asset and has not received any actual cash flow. This reform aims to replace the previous system based on deemed returns, which courts ruled as unfair.
However, for long-term investors, especially in crypto, this annual taxation on unrealized gains creates several significant disadvantages.
Core drawbacks for long-term investors
Liquidity pressure: paying tax before receiving cash
When unrealized gains are taxed:
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Investors must have cash available to pay taxes
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Without external liquidity, they may be forced to sell part of their portfolio
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This disrupts the “buy & hold” strategy
For highly volatile assets like crypto, the risks are amplified:
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A strong growth year → large tax obligation
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A following downturn → portfolio declines, but taxes already paid
Weakening the compounding effect
Long-term investing relies on reinvesting returns to maximize compounding growth. When investors must pay 36% of annual gains:
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Accumulated capital is gradually reduced
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Actual growth rates slow down significantly
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The difference in wealth after 15–20 years can be substantial with systems that tax only upon sale
Annual taxation on gains makes long-term accumulation strategies far less efficient.
Increased exposure to market volatility
Crypto and growth stocks can:
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Rise sharply in one year
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Drop significantly in the next
If tax systems do not allow flexible loss offsets, investors may face:
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High taxes paid at peak valuations
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Subsequent asset declines
This significantly increases the risk cost of long-term investing.
Rising incentive for capital relocation
Given the high mobility of digital assets, stricter tax policies may push investors to reconsider their tax residency. Two commonly cited alternatives are Portugal and Panama.
Comparison with more investor-friendly jurisdictions
Portugal
Key points:
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0% tax on crypto held for more than 365 days
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28% tax if sold within one year
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No tax on unrealized gains
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Tax applies only upon disposal of assets
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Stable legal framework within the EU
Analysis:
Portugal’s model clearly encourages long-term investment strategies. The full tax exemption after one year promotes capital accumulation over short-term speculation.
More importantly, the absence of tax on unrealized gains means investors do not face annual liquidity pressure.
Compared to the Netherlands—where paper gains may be taxed at 36% annually—Portugal allows assets to grow freely over time, preserving the compounding effect and maximizing long-term wealth accumulation.
While no longer a “zero-tax haven” in absolute terms, Portugal remains highly favorable for long-term investors, especially those focused on multi-year capital growth.
Panama
Key points:
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Territorial tax system
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Only taxes income generated within Panama
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No tax on unrealized gains
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No strict standalone crypto tax regime
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Suitable for international investors and digital nomads
Analysis:
Panama operates on a territorial taxation principle, meaning only locally sourced income is taxed. If crypto profits are generated via international exchanges or offshore activities, they may, in many cases, not be taxed in Panama.
This creates significant advantages for global investors:
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No tax on unrealized gains
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No annual tax obligation on paper profits
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No global taxation framework like in many European countries
Compared to the Netherlands, where tax may apply even without realized income, Panama offers a much more flexible and investor-friendly environment.
This is why Panama is often referenced in international wealth structuring and legal tax optimization strategies for globally diversified portfolios.
Conclusion
The Dutch tax reform aims to replace the deemed return system with a framework based on actual returns. However, taxing unrealized gains at 36% introduces:
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Liquidity pressure
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Erosion of compounding returns
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Higher risk in volatile markets like crypto
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Stronger incentives to seek more favorable tax jurisdictions
Meanwhile, Portugal encourages long-term holding through tax exemptions after one year, while Panama offers advantages through its territorial tax system and absence of unrealized gain taxation.
These contrasting approaches highlight how tax policy is becoming a key competitive factor in attracting global digital asset investors.
