Could Dutch-style wealth taxes be coming to Britain?
Governments everywhere prefer revenue that can be framed as “fairness”. If the Dutch can make taxing gains as they accrue work without damaging long-term capital formation, it will not stay a Dutch story for long, says Helen Thomas
The Netherlands has just approved a reform to its capital gains tax regime that is already sending ripples well beyond The Hague. At a time when governments are hunting for new revenue without admitting they’re raising taxes, wealth levies have come back into vogue. The Dutch version is especially combustible because it reaches into unrealised gains, looking to tax paper profits that you haven’t cashed in.
The reform sits inside the Dutch personal tax system’s infamous “boxes”. Box 3 covers income from savings and investments and for years it has been run on a fiction that was already controversial. The state assumed you earned a notional return on your assets and taxed you on that, whether you actually did or not. Following the financial crisis this caused consternation, with savers gaining zero return on their cash deposits but prey to a much higher assumed interest rate that had not been seen for years.
The newly approved Actual Return in Box 3 Act is due to take effect on 1 January 2028 and will tax actual returns at a flat rate of 36 per cent. It includes cash yields such as interest, dividends and rent, and for many assets the annual change in value, even if the investor never sells. It is a form of mark-to-market taxation for mainstream financial assets.
It is not hard to see why this alarms long-term savers. Taxing gains as they accrue can force people to sell assets simply to pay the bill, particularly in volatile markets. The backlash in Dutch press coverage has been intense, even among people who accept the need to replace the old system.
Legal endgame
If this feels like a bold political choice, it is better understood as a legal endgame. The Dutch Supreme Court has spent years dismantling the credibility of Box 3’s “assumed return” model.
The landmark “Christmas judgment” of December 2021 had ruled that the assumed return approach could violate property rights and non-discrimination protections when it diverged from reality. A further ruling in June 2024 confirmed that where a taxpayer’s actual return is lower than the notional return, there must be a route to tax based on the real outcome.
The new Dutch government is a rare minority coalition of D66, VVD, and CDA and each has their concerns over the new policy. D66 is the most open to a more assertive redistribution narrative; VVD is instinctively wary of measures that look hostile to capital; whilst CDA tends to emphasise fairness and social cohesion.
The politicians have had to bend to the legal reality. Parts of the governing coalition may wince at the optics but the alternative is a system the courts have repeatedly told them cannot stand. Receiving an annual income stream rather than lump sums when assets are sold should smooth revenues into the Dutch Treasury. Without the reform, the cost is forecast to be around EUR 2bn. It’s not as if the Dutch are desperate for the money, with a budget deficit that is modest by European standards at less than two per cent and debt a comparatively low ~45 per cent of GDP. But the politicians must comply with the courts.
The Netherlands is not alone in revisiting wealth. Spain now has a “solidarity” tax on large fortunes. Norway’s Labour Party returned to power last autumn following an election campaign where voters were divided on the merits of the wealth tax. Even Switzerland recently held a referendum on whether to introduce a 50 per cent tax on inherited fortunes over CHF 50 million, although it was soundly rejected. In Australia, reforms to capital gains tax are expected in the Budget in May.
The UK already has a long-running argument about whether we tax wealth too little compared to work. Labour’s fiscal constraints make the temptation obvious
The UK already has a long-running argument about whether we tax wealth too little compared to work. Labour’s fiscal constraints make the temptation obvious. Yet senior ministers have been wary. Last summer the Business Secretary dismissed a broad wealth tax as “daft”, citing practical difficulties. But we are in a new political climate after the changes to Keir Starmer’s team and the topic is likely to be revisited. In a lurch to the left, wealth is where the argument will go first.
A tax on unrealised gains is politically radioactive and still the Netherlands is moving there, albeit for legal reasons. Governments everywhere prefer revenue that can be framed as “fairness”. If the Dutch can make it work without damaging long-term capital formation, it will not stay a Dutch story for long. Such taxes, even if “daft”, could come to these shores sooner than people might think.
Helen Thomas is founder and CEO of BlondeMoney