New Dutch Box 3 tax sparks unease among crypto investors

A fresh debate over Box 3 is causing unease among Dutch cryptocurrency holders. Claims are circulating on social media that from 2028, Dutch citizens holding crypto in self custody will pay 36% tax each year on unrealised gains, while investments held through certain regulated products would only be taxed when sold.

But there is an important nuance here: the government letter being cited refers to financial instruments within the meaning of MiFID. Cryptoassets that fall under MiCA are not automatically financial instruments. The conclusion that crypto held on regulated exchanges will fall under the more favourable regime therefore does not follow from that letter.

Letter sows confusion over crypto

The Dutch government is working on a new Box 3 system in which the actual return on assets takes centre stage. The plan is to replace the current system from 2028.

The government letter refers to a possible adjustment for financial instruments, specifically financial instruments as defined under MiFID.

That distinction matters. Ordinary cryptoassets in Europe generally fall under MiCA and are therefore not simply the same thing as MiFID financial instruments. On the basis of this letter, then, it cannot be concluded that Bitcoin held on a regulated exchange will in future be taxed only on sale.

Nor can the distinction between crypto held at an exchange and crypto held in a personal wallet be drawn so firmly on the strength of this passage alone.

Concerns about taxing unrealised gains

The broader concerns revolve around the tax on asset appreciation. Under such a system, tax can be levied on the increase in value within a year, even if the investor does not sell the asset.

That is a sensitive matter for volatile holdings such as crypto. A crypto holder may be sitting on a substantial paper gain and owe tax on it, even though that gain has not actually been realised.

Willem Middelkoop and Madelon Vos, among others, warn that self custody crypto could be treated unfavourably as a result.

The 36% figure that has been circulating relates to the tax rate applied to the calculated Box 3 return. It does not mean that 36% of the total value of a crypto wallet goes to the Dutch tax authority every year.

The final treatment of crypto remains the key question

According to the AD, the debate forms part of the political negotiations over the reform of Box 3.

For crypto holders, what matters most is how different types of crypto are ultimately classified in legal and tax terms. The claim now doing the rounds, that self custody will be taxed annually on unrealised gains from 2028 while the same crypto held on a regulated exchange will be taxed only on sale, cannot simply be inferred from the letter being cited.

The plans are, moreover, part of a political and legislative process. The final rules could therefore still change before the new Box 3 system actually takes effect.