No Sale, Still Taxed: Netherlands Targets Paper Crypto Profits

Netherlands applies 36% tax on deemed crypto returns under Box 3, taxing holdings based on annual asset valuation, even without a sale.

The Netherlands has implemented a tax structure that applies to crypto holdings even when no sale occurs. Under the country’s wealth tax framework, digital assets are taxed based on deemed annual returns rather than realized gains.

The effective rate tied to these calculated returns is 36%, and it applies to holdings reported under the Box 3 system.

New 36% Rate Applies to Deemed Crypto Returns

Under the Dutch Box 3 tax regime, assets are taxed based on assumed returns. This system does not rely on actual realized gains.

Instead, the tax authority applies a fixed calculation to determine taxable income.

Cryptocurrencies fall under this wealth tax category. Investors may owe taxes even if they continue to hold their assets.

The rate tied to the calculated return is 36% for the applicable bracket.

The policy means individuals can face tax obligations without selling holdings.

If asset values rise during the year, the taxable base may increase. The structure does not directly depend on profit-taking transactions.

Tax Structure Based on Annual Asset Valuation

The Dutch tax authority assesses asset values on a fixed annual date. Crypto balances held in wallets or on exchanges must be reported. The declared value contributes to the overall taxable wealth calculation.

The tax does not depend on actual profits received. Instead, it relies on a formula that estimates a return on total assets.

This method applies whether gains were realized or remain on paper.

If the market declines after the valuation date, the previous assessment still stands.

Future tax years may reflect lower values if asset prices fall. The structure is based on yearly snapshots rather than transaction history.

Related Reading: Netherlands Risks Investor Exit with Proposed Crypto Tax on Unrealized Gains

Broader Debate Around Crypto Tax Policy

The updated tax approach has drawn attention within the digital asset sector. Some market participants note that other jurisdictions apply capital gains tax only upon sale.

The Dutch model differs because it taxes notional returns.

Countries such as Portugal, Singapore, and the United Arab Emirates have adopted alternative crypto tax policies.

These jurisdictions apply varying treatment to digital assets. Some offer lower rates or exemptions under certain conditions.

Dutch officials state that the system aims to align taxation across asset classes.

Crypto assets are treated similarly to other investments within Box 3. The policy remains in effect as authorities continue to refine wealth taxation rules.

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